A 5% increase in customer retention can improve a company’s profitability by 75%, according to Bain research. Yet most retailers are more focused on acquisition and conversion than retention. Despite investing billions in this pursuit, ecommerce has created a “customer experience gap” for retailers unable to engage customers at key post-purchase moments. Brands are learning the hard way that lackluster engagement and an afterthought communication strategy is a guaranteed way to lose loyalty.

To address this important issue Pulse Commerce conducted mystery shopping at nearly 500 leading U.S. online merchants prior to the 2017 peak holiday shopping season. The result is a picture of true behavior rather than survey feedback, and benchmarking by product category for comparison to peers as well as to Amazon.

Download the full study here.

Offer 1-day and 2-day shipping at ground rates or less.

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Less than three weeks before the prices take effect the day after Christmas, UPS announced its 2019 rate schedule, including an overall rate increase of 4.9% for its ground, air and international services, leaving shippers scrambling to adapt at the busiest time of year.

Last year UPS announced its general rate increase (GRI) in October, and in September the year before that. FedEx announced its 4.9% GRI for 2019 in early November. While the new FedEx rate schedule takes effect Jan. 7, UPS’s hike happens as of Dec.26, meaning it will hit the first massive wave of Christmas returns.

“This year (UPS) announced it three weeks before the effective date and in the heat of the fourth quarter peak shipping,” said parcel consultant Jerry Hempstead. “Large shippers will have little time nor the IT resources to sift through the nuances of this year’s announced changes.”

Read the full article here.

Offer 1-day and 2-day shipping at ground rates or less.

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How Amazon’s two-day shipping is disrupting retail. The quest to offer fast, free delivery has triggered an arms race among the largest retailers.

Amazon is already making up most of the US ecommerce sales. However, they rely heavily on 3rd party sellers. These sellers experience major pain related to shipping cost and time. Fast shipping is now an expectation, but it is expensive for most sellers. Sellers often limit fast shipping to veru=y samll items or to local addresses. This limits their buy box opportunities.

Alongside life, liberty and the pursuit of happiness, you can now add another inalienable right: two-day shipping on practically everything .
Amazon.com Inc. has made its Prime program the gold standard for all other online retailers, according to surveys of consumers. The $119-a-year Prime program—which now includes more than 100 million members world-wide—has triggered an arms race among the largest retailers, and turned many smaller sellers into remoras who cling for life to the bigger fish.

In the past year, Target Corp. , Walmart Inc. and many vendors on Google Express have all started offering “free” two-day delivery. (Different vendors have different requirements for no-fee shipping, whether it’s order size or loyalty-club membership.)

Optimizing Prime

Amazon’s shipping infrastructure isn’t used just by Amazon. As shoppers who read the fine print know, it’s also available to its retail partners through its Amazon Marketplace. Of the top 10,000 sellers on Amazon—collectively representing about half of Amazon’s Marketplace revenue—at least 90% have one product in the Fulfillment by Amazon program, says Juozas Kaziukėnas, chief executive of Marketplace Pulse, a business-intelligence firm focused on e-commerce. Almost 70% use it to stock and ship at least half of their products, he adds.

Competitors Great and Small

Amazon’s nominal competitor in online retail, Walmart, also offers a marketplace for third parties to sell their goods; the big difference is, it doesn’t assist them with fulfillment—and forbids them from using Amazon’s fulfillment services.
Scale is essential. Mom-and-pop shops and even midsize retailers can no longer assume buyers will put up with getting their goods days later via the U.S. Postal Service. In response, startups are trying to aggregate enough retail customers that they can offer the all-important fixed rates for nationwide two-day shipping.

Read the full article here. 

Offer 1-day and 2-day shipping at ground rates or less.

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Simply put, “pick and pack” is the process of picking a customer’s order off of a shelf (or wherever it’s stored) and packing it in a box to be shipped to the customer. If you’re a new seller with just a few orders a day, you’re probably doing your own picking and packing – maybe out of your living room! The time, energy, and focus it takes to correctly pick and pack order after order quickly overwhelms sellers as they grow, though, which is why most turn to a 3PL and outsource their ecommerce order fulfillment once they get traction in the market. As you can imagine, picking and packing gets a lot more complex in a warehouse optimized for speedy and accurate ecommerce fulfillment. Read on to learn how pick and pack quality impacts your ecommerce store, how the experts optimize their order picking, and how you can find the best pick and pack fulfillment service for your needs.

What is Warehouse Picking?

Warehouse picking is the process of selecting and retrieving products from a warehouse or storage facility to fulfill customer orders. It is a critical component of the supply chain and plays a vital role in ensuring customer satisfaction. The picking process involves several steps, starting with receiving products into the warehouse, storing them in designated locations, and then picking the items as orders come in. Strategic planning, coordination, and execution are essential to ensure efficiency and accuracy in warehouse picking. By optimizing these processes, businesses can improve their overall operational efficiency and deliver a better experience to their customers.

Why Pick and Pack Fulfillment Quality Matters for Customer Satisfaction

Picking speed is an essential behind-the-scenes metric for ecommerce stores because it dictates order cutoffs and on-time delivery. These metrics in turn have a big impact on your conversion rate and repeat customer rate, and therefore your overall growth!

Your order cutoff time is the time in the day before which a customer has to place an order that can be shipped out that same day. Faster, more efficient picking operations can set later order cutoffs. In the days of 7 day shipping, this wasn’t such a big deal. With the rise of 1 and 2-day shipping, though, missing an order cutoff means a customer has to wait twice as long to receive their package. According to McKinsey, almost half of online shoppers will buy elsewhere when the estimated delivery time is too long – so an early cutoff means lost customers.

Picking accuracy is perhaps even more important than picking speed. As more sellers pile into ecommerce, price and advertising competition continue to rise, squeezing margins. Repeat customers who don’t need advertising to convert are critical to a seller’s ability to build a sustainable long-term business model. Sending customers the wrong order kills a brand’s image, likely loses the chance to create a long-term customer, and on top of that incurs return shipping fees.

Finally, intelligent packing can make the difference between a profitable sale and an unprofitable one. How? It’s all in the box.

It’s easy enough to set rules that guide which single item orders are put in which boxes. But what about multi-item or multi-quantity orders? They can quickly get confusing for warehouse personnel, and workers under pressure to go fast default to using too-big boxes to fit all the items. That, in turn, increases the dimensional weight of the box, which increases the cost of the shipping label.

Top ecommerce fulfillment 3PLs like Cahoot have efficient picking operations that work quickly while minimizing errors and cost. Cahoot’s processes enable 2 pm cutoff times that are a full two hours later than the industry standard, while its teams use barcode scanners to eliminate errors. When every single pick is checked by a computer, the order is right every time. Finally, Cahoot software creates intelligent and dynamic rules even for the most complicated multi-item orders that minimize shipping cost, saving you money.

Pick and Pack Warehouse Picking Strategies

How does picking and packing work in an ecommerce warehouse? The answer varies widely based on the sophistication of the operation and what types of items they’re working with. Automation also has a huge impact on how warehouses pick and pack, with the most tech-forward operations leaning heavily on robots and conveyor belts to quickly move items to humans doing the picking and packing. Different warehouse picking strategies can be employed to optimize efficiency and accuracy, depending on the specific needs of the operation.

Piece Pick and Pack

Piece Picking is the most straightforward method. Fulfillment personnel will pick orders one at a time as they come in, moving about the warehouse to pick items before returning to a packing station to prep the package for handoff to a carrier.

In most warehouses, each item will be stored in its own bin or case in a distinct location. When an order comes in, warehouse software will automatically generate a “pick list” that tells the worker where each item is stored in the warehouse. That way, the worker knows where to go to find each item and can grab them one at a time.

While this is the simplest pick and pack method, it’s also the least efficient, and most medium-to-large warehouses have moved past it.

Batch pick and pack

Batch Picking is similar to Piece Picking in that workers still move about the warehouse picking items for individual orders, but in Batch Picking, workers pick items to fulfill more than one order at a time.

Intelligent warehouse management software (WMS) guides this process to its optimal level of efficiency. Larger warehouses with more orders coming in have more opportunities for personnel to pick for multiple orders at once. Let’s say that four orders come in for the same pack of soap within three minutes of one another; in this simple example, the WMS will send just one worker to pick the soap for all four orders, bring it all back to a packing station, and to pack all the orders sequentially. Of course, this saves several trips to the soap shelf and helps the warehouse run more efficiently.

Zone pick and pack

Zone Picking is the first big step up in complexity, and it involves splitting the entire warehouse into different “zones” and giving different workers responsibility for each zone. Order pickers stay in their zone, and they pick items from their assigned zone only. Instead of the worker passing from zone to zone, they pass the picking box or cart over to the next zone from which it needs items. Once all of the needed items have been picked, they’re passed to the packing station, which is a separate and final zone.

Warehouses that use Zone Picking often have automated parts of the process – for instance, many will have conveyor belts that connect different zones to one another. That makes handoffs between personnel in different zones much quicker and more efficient, freeing them up to focus on fast and accurate picking. Each zone will also connect to the packing station via conveyor belt, so that orders of single units can quickly be passed up to the packing station for shipping.

Wave pick and pack

Finally, Wave Picking combines Zone Picking and Batch Picking. Each zone picks a large amount of items needed for orders in a batch, and then that batch is combined with batches from each other zone and sent up to the packing station. Workers at the packing station then grab what they need for orders from the batches packed from each zone to prepare for shipping.

Like Zone Picking, Wave Picking benefits significantly from automation and is frequently employed in large, sophisticated ecommerce fulfillment facilities.

Technology in Warehouse Picking

Technology plays a vital role in enhancing warehouse picking processes. Some of the most common technologies used in warehouse picking include:

• Warehouse Management Systems (WMS): A WMS is a software solution that manages and optimizes warehouse operations, including picking, packing, and shipping. It helps streamline the entire picking process by providing real-time data and insights, ensuring that orders are fulfilled accurately and efficiently.
• Voice Picking: Voice picking uses voice commands to guide pickers through the picking process. This hands-free technology improves accuracy and efficiency by allowing pickers to focus on their tasks without the need to handle paper lists or devices. Voice-directed picking with natural language processing moves beyond simple voice commands to systems that understand more complex natural language, reducing errors and training time.
• Collaborative Mobile Robots (Cobots): Employing collaborative robots (cobots) that can safely work alongside human pickers in shared workspaces, performing tasks like transporting picked items or assisting with heavy lifting. These robots are designed to work alongside human pickers, handling repetitive and labor-intensive tasks, enhancing productivity and reducing the physical strain on workers.
• Barcode Scanning: Barcode scanning, (a.k.a. Pick Scanning), uses barcodes to track and verify products throughout the picking process. This technology improves accuracy by ensuring that the correct items are picked and reduces the likelihood of errors leading to re-picks (which also reduces the likelihood of working putting the mis-pick back in the wrong bin location).
• Automated Guided Vehicles (AGVs): AGVs are robotic vehicles that automate the transportation of products within the warehouse. They improve efficiency by reducing the time and labor required to move items from one location to another, allowing human workers to focus on more complex tasks.

Warehouse Order Picking Best Practices

Implementing best practices in warehouse order picking can help improve efficiency, accuracy, and customer satisfaction, while limiting the amount of financial waste. Some of the most effective best practices include:

• Optimizing Warehouse Layout: A well-organized warehouse layout can significantly reduce travel time for pickers, improving overall picking efficiency. Grouping frequently picked items together and placing them in easily accessible locations can streamline the picking process.
• Implementing Efficient Picking Methods: Utilizing efficient picking methods, such as Batch Picking or Zone Picking, can enhance productivity and reduce labor costs. These methods allow pickers to handle many orders simultaneously or focus on specific zones, minimizing unnecessary movement. Personalized picking instructions based on worker experience tailors picking workflows to individual worker experience levels, optimizing for both speed and accuracy.
• Utilizing Technology: Leveraging technology, such as WMS or VoicePicking, can improve accuracy and efficiency in the picking process. These tools provide real-time data and guidance, helping pickers make informed decisions and reducing the likelihood of errors. Using computer vision to identify items during picking is another technology that reduces errors and speeds up verification.
• Providing Continuous Training: Continuous training for pickers is essential to maintain high levels of accuracy and efficiency. Regular training sessions can help workers stay updated on best practices, new technologies, and safety protocols, reducing errors and improving overall performance.

Common Challenges in Warehouse Picking

Warehouse picking is a complex process that presents several challenges, including:

• Inaccurate Inventory: Inaccurate inventory records can lead to picking errors, delays, and lost sales. Ensuring accurate inventory management is crucial to avoid these issues and maintain efficient warehouse operations.
• Inefficient Picking Routes: Inefficient picking routes can cause pickers to travel long distances within the warehouse, leading to longer pick times and higher labor costs. Optimizing picking routes through strategic planning and technology can help reduce travel time which improves efficiency.
• Labor-Intensive Processes: Manual picking processes can be labor-intensive, leading to higher labor costs and potential errors. Automating repetitive tasks and utilizing technology can help reduce the physical strain on workers and improve accuracy.
• Lack of Training: Untrained or poorly trained staff can lead to mistakes, inefficiencies, and safety risks. Providing comprehensive training and ongoing education for warehouse staff is essential to ensure smooth and accurate picking processes.
• Compliance and Regulations: Warehouses must comply with various industry regulations and standards, which can be challenging to manage. Staying updated on regulatory requirements and implementing compliance measures is crucial to avoid penalties and maintain operational efficiency.

How Does Pick and Pack Work for Fragile Items?

When picking and packing fragile items, speed becomes less important than the safety of the goods. After all, sending items that arrive broken is even worse than sending items slowly; you’ll have to write off the value of the broken items and pay to ship out replacements.

Picking and packing fragile items so that they don’t break in the warehouse or during transit used to come down to the experience and know-how of individual staff. Like most processes in the warehouse, though, guesswork is being replaced by intelligent automated rules to ensure that products arrive safely.

Consider our example below of a host of fragile goods from a fine Italian food purveyor. Each item is a damage risk, making an order with all of them a nightmare for most warehouse personnel.

An intelligent shipping software will make the difficult feasible by splitting the order into a number of shipments that finely balances shipping cost and breakage risk. It will then give guidance to the packing station on how to precisely protect and package each item to fit into the smallest box that will prevent damage in transit.

Many warehouses are set up for peak speed and efficiency, and thus, they don’t have the flexibility to intelligently adapt to different types of goods that need different treatment. That’s where Cahoot sets itself apart.

Future Trends in Warehouse Picking

The world of warehouse picking is constantly evolving, driven by technological advancements, changing consumer demands, and global economic shifts. Some of the future trends in warehouse picking include:

• Adoption of Artificial Intelligence: Artificial intelligence is expected to play a larger role in warehouse picking, automating tasks, and improving efficiency. AI-powered systems can analyze data, dynamically calculate the most efficient picking routes in real-time, considering factors like traffic, order priority, and worker location, and predict demand, enhancing overall warehouse operations.
• Increased Use of Robotics: Robotics is expected to become more prevalent in warehouse picking, automating tasks, and improving efficiency. Advanced robots can handle complex picking tasks, work alongside human workers, and adapt to changing warehouse environments.
• Growing Importance of Sustainability: Sustainability is becoming increasingly important in warehouse picking, with companies looking for ways to reduce their environmental impact. Implementing eco-friendly practices such as reducing waste and optimizing energy use can help warehouses become more sustainable.
• Blockchain for supply chain transparency and tracking: Using blockchain technology to track items throughout the supply chain with up to the minute status and location.
• Increased Focus on Customer Satisfaction: Customer satisfaction is becoming increasingly important in warehouse picking, with companies looking for ways to improve delivery times and fulfillment accuracy. Enhancing the picking process through technology and best practices can help meet customer expectations and drive business growth.

By staying ahead of these trends and continuously improving their picking processes, warehouses can ensure they remain competitive and meet the evolving needs of their customers.

Cahoot: The Best Pick and Pack Fulfillment Service

Cahoot’s nationwide network of over 100 warehouses provides affordable national ecommerce order fulfillment for online merchants. Our wide and diverse network enables us to fulfill a wide variety of needs, from sellers who need absolute peak speed at minimum cost to those that have fragile items or others that require special handling.

Our fulfillment centers are outfitted with dedicated personnel and technology that confers all the benefits of a top pick and pack service:

• Efficient picking enables late (2pm local time) order cutoffs
• Barcode scanning all but eliminates fulfillment defects
• Intelligent pick and pack software optimizes box size for every order, minimizing shipping cost for simple and complex orders
• Lowest cost by design

Unlike other providers, Cahoot also has the flexibility to work alongside existing merchant-owned warehouses (if you have them). We know that many merchants with non-standard items and order profiles carefully manage fulfillment themselves due to how difficult the process can be. Cahoot will analyze your existing network and customer base, then add a few locations of our own to seamlessly extend your network into a nationwide footprint.

With this approach, you can continue to get value out of your existing assets while delighting your customers and your bottom line with affordable fast shipping. Of course, our approach works just as well for merchants who want to fully outsource their fulfillment, and we’d be more than happy to take that on. Getting started with Cahoot is fast and easy – with pre-built integrations for major ecommerce channels like Amazon, Walmart, Shopify, and BigCommerce, we can get merchants started in as little time as it takes to send us your inventory. Talk to one of our experts today and explore how we can be the key that unlocks the next level of your profitable ecommerce growth.

Frequently Asked Questions

What is warehouse picking?

Warehouse picking is an order fulfillment process where item(s) from a customer order are retrieved from their inventory location(s) in a fulfillment or distribution center such as in a bin or on a shelf or pallet. Warehouse picking is the step that occurs before products are packaged and shipped out to their destination.

What is the picking process in a warehouse?

Warehouse picking is the process of finding items within a warehouse or fulfillment center and preparing them for shipment to customers. But there’s a lot of different ways to go about warehouse picking to ensure that it’s done as effectively and efficiently as possible.

What do you do as a warehouse picker?

Warehouse pickers are responsible for finding, picking, and packing goods for dispatch. They work in various locations, including e-commerce warehouses, wholesalers, and cold storage warehouses. It’s a physically demanding role that involves bending, lifting, and carrying products.

How to do picking in warehouses?

There are many strategies for picking in warehouses, which include batch picking, wave picking, zone picking, and piece picking. The best strategy for your warehouse picking setup will depend on the order volume running through your warehouse, the total number of SKUs in storage, your total number of pickers working at the same time, the type of facility you have, and the inventory management system and other technologies you have at your disposal. The different picking methods each have their own advantages and drawbacks.

What is voice picking in a warehouse?

Voice picking is a method of warehouse picking where pickers are equipped with a headset and microphone so they can easily communicate with the warehouse manager about picking details. Some systems are connected with an automated management system, which eliminates the need for a human on the other end of the line. Similar to other wearable warehouse picking options, voice picking has proven to be a time-efficient method and it also cuts down the likelihood of picking errors.

Seeing the success of Amazon’s outsourced fulfillment service Fulfilled By Amazon (FBA), marketplaces and e-commerce platforms are racing to build their own e-commerce order fulfillment networks. Undoubtedly, it is beneficial for sellers to have access to third-party fulfillment services wherever they choose to sell, but at what cost? Do these marketplaces have the sellers’ best interests at heart?

Multi-Channel Selling is More Profitable

When Third-party Sellers first started selling online, the first questions were, “Should I sell on Amazon or eBay besides my e-commerce website?” However, over time, that question has changed into, “How do I sell on both, as well as Walmart and other marketplaces when they make sense for my business?”. In fact, with the current e-commerce trend, it is almost imperative for online sellers to sell on multiple channels to survive, let alone grow. Numerous studies show that retailers selling on two or more sales channels have a healthier bottom line, on average, than those that don’t. But it gets complicated. Now, each platform has its e-commerce order fulfillment service and prioritizes the display and, thus, the sale of items fulfilled through them.

Let’s take a closer look at each.

Amazon FBA: Penalizing Multi-Channel Order Fulfillment

Amazon launched its third-party marketplace to satisfy customer demand for a broader assortment of products. Third-party (3P) Sellers add products much faster than Amazon, sourcing all the items themselves and helping build the “everything store” behemoth. According to recent data, over 60% of all physical goods sold on Amazon are from Third-party Sellers, meaning most products sold on the platform come from independent sellers rather than Amazon itself.

Then came Fulfillment by Amazon (FBA), a large-scale distributed warehousing and order fulfillment network for its Third-party Sellers. FBA helps Amazon offer nationwide 1- and 2-day delivery to customers (and regional same-day delivery) even if a 3P Seller sold the item. Commanding approximately 37.6% of all U.S. e-commerce spending in 2023, Amazon negotiated unbeatable shipping rates from all major carriers and offered incredibly low fulfillment fees to sellers. Opting for FBA gives Sellers a distinct advantage within the Amazon ecosystem. FBA sellers are more likely to win the “buy box” and are outright forgiven for any shipping-related customer complaints.

However, using FBA to fulfill non-Amazon orders is not as rewarding financially. Amazon uses FBA to deliver an excellent shopping experience for Amazon customers and power its famous growth flywheel by prioritizing its FBA services for its marketplace customers. The fees for non-Amazon orders are much higher, sometimes by as much as 30–50%. Moreover, Walmart outright banned FBA from its platform due to Amazon’s aggressive branding on boxes. In recent years, Walmart has approved using either Flexport or ShipBob fulfillment services to fulfill Walmart orders, but not both.

Shopify Order Fulfillment Network (Flexport)

Shopify started as an e-commerce platform that enabled sellers to quickly create their own professional online store independent of marketplaces. With its vibrant app ecosystem, Shopify aims to be a one-stop shop for small and midsize online sellers.

One of its growth strategies has been the app marketplace. Shopify’s incredible store diversity also means a high demand for specialized features. Keeping up with this expectation through Shopify’s development team is very challenging. Therefore, they’ve created an app marketplace to serve their sellers’ growing needs quickly. Through the marketplace, third-party companies can build and monetize specialty apps that augment and extend Shopify’s native functionality.

To continue fueling its growth, Shopify launched additional services to power more parts of the seller’s business and capture a larger share of the wallet. These services include Shopify Payments, Point-of-Sale, Shopify Capital, and Shipping Label printing. Small and midsize (SMB) sellers need these services, and they like the simplicity of a one-stop shop. These value-added services have increased Shopify’s revenue per seller over time.

Shopify also tossed its hat into the e-commerce order fulfillment ring as an extension of the same strategy. ‘Shopify Fulfillment Network’ (sold to and rebranded as Flexport in mid-2023 but still operating the Shopify Fulfillment Network app) is geared towards Shopify sellers with options such as custom packaging. The pricing and shipping speed aren’t expected to be near FBA (at least not in the near term), as Shopify does not own any logistics infrastructure. However, there are plans to partner with other warehouses and Third-party Logistics (3PL) providers. Smaller Shopify sellers who fulfill orders by themselves may find it a step up, but it’s too early to say. One thing we know for sure is that fulfilling orders through Shopify will not boost their “buy box” chances on Amazon. Shopify is serious about this move, as demonstrated by their acquisition of 6 River Systems for $450 M in September 2019.

Walmart Fulfillment Services (WFS)

Walmart introduced a fulfillment network similar to FBA in 2020 called Walmart Fulfillment Services (WFS). Third-party Sellers ship their inventory to Walmart’s network of over 40 domestic fulfillment centers for storage and then e-commerce orders are picked, packed, and shipped to customers. Walmart reported recently that 66% of its third-party Sellers use the service to ship more than half of Walmart Marketplace orders (up from fulfilling only ~25% of e-commerce orders just three years ago). The program aims to take the fulfillment burden off its Seller partners and increase delivery speeds for the end customers (often within 2 days). It also supports customer service for WFS‑fulfilled orders and handles returns, which frees up Sellers to focus on growing their business.

Unlike Amazon, Walmart ships approximately half of its e-commerce orders from its 4,600+ physical stores. This is possible because a store is within 10 miles of ~90% of the US population. While WFS rates are reported to be about 15% lower than competitors’, the captive order fulfillment services are tied to product discoverability on the marketplace, making participation more or less mandatory for merchants that choose to partner with Walmart.

The strategic bet paid off big time, as Walmart’s marketplace grew to become the second-largest in the US, edging out eBay.

Fulfilled by TikTok (FBT): The New Kid On the Block

Despite being the newest social commerce platform in the US, TikTok Shop is already estimated to be the third largest, trailing only Facebook and Instagram. In a strategic move that mimics the fulfillment services competitors that came before it, TikTok Shop launched Fulfilled by TikTok (FBT) in late 2024 to manage the storage, picking, packing, and shipping of orders placed on TikTok for its creators and brands. Sellers will like that inventory can also be intelligently distributed to support the same nationwide fast delivery at ground shipping rates that other fulfillment networks offer.

It remains to be seen if there will be a captive component to FBT such that product discovery and sales are undeniably linked to using the new service. Still, since the native influencer- and creator-first nature of TikTok and TikTok Live drive much of TikTok Shop’s traffic, it may be some time before a long-term stickiness strategy is developed. We know now that early users will benefit from subsidized storage and shipping costs, as well as ‘free’ customer service for order and shipping support. Customizable ‘badges’ help early users stand out from the competition.

Be Careful Jumping Onto the Bandwagon

So, nearly every major marketplace in the U.S. now has a preferred e-commerce order fulfillment network. Using a non-preferred fulfillment network has definite downsides, some outright punitive. These moves contradict the trend of multichannel selling and come at the sole expense of Sellers.

So why not sign up for all the order fulfillment networks?

It’s not even about the fees these networks charge, which can be significant for any business. The large hidden costs come from maintaining inventory at multiple locations. Let’s break it down:

1. Redundant inventory in key markets: Imagine a merchant who wants to offer fast shipping to customers in California and operates on three different marketplaces. The merchant would then need to store its inventory in California at three separate warehouses for each marketplace. After accounting for safety stock, that’s a lot of excess capital tied up unnecessarily.
2. Multiple inbound shipments: If a merchant signs up with three fulfillment networks, they must ship their inventory to three warehouses in every major region. This will be more expensive because they’ll be splitting their one big inbound shipment into multiple smaller inbounds.
3. Safety stock: Splitting the same amount of inventory between multiple warehouses instead of one or two increases the amount of safety stock merchants must maintain. The square root law of inventory calculates the additional safety stock that needs to be kept on hand as the number of fulfillment centers increases.
4. Clearance through multiple channels: If a product doesn’t sell well, merchants will incur the cost of clearing the dead stock through each of these redundant fulfillment centers.
5. Returns through multiple channels: Sellers must also compensate or pay for restocking returns on every platform, which can be as high as 20% in some product categories.

Apart from the tangible costs, managing multiple fulfillment programs can cause headaches—for example, the added complexity of juggling multiple contracts, billing audits, and keeping track of ever-changing rates and terms. Furthermore, holding more inventory exposes sellers to a higher risk of losses from shifts in customer demand or during a recession. If a Seller opts to go with an unaffiliated third-party logistics provider, they become a buy box pariah on every platform.

It is hard to ignore the environmental costs, too. The inefficiencies of excess inventory at its core result in a larger carbon footprint through excess transportation and warehousing operations. The repercussions are brutal to ignore when humanity is inching towards irreversible damage to the climate every day. Sellers are losing, and so is our planet!

The Future of Order Fulfillment is Wide Open

The platforms and marketplaces are doing what’s best for them. They are building their e-commerce order fulfillment networks to drive revenue and lock Sellers into their platforms. However, what’s best for marketplaces may not be best for Sellers. Captive order fulfillment services add unnecessary costs and do not scale to a seamless customer experience across channels.

The optimal future of order fulfillment is customer-centric. It means delivering goods to customers how they prefer, not limited to the options the seller or the fulfillment partner thrust upon them. The options should not be limited to lightning-fast delivery or Buy Online Pickup in Store (BOPIS). They should also allow the customer to choose greener delivery options for the Earth or the ability to have the order delivered the same day from a local store without costing an arm and a leg. When order fulfillment networks operate under this new paradigm, they’d be able to offer these options (and more) to merchants of all sizes, and such services will not be a luxury limited to large multi-billion dollar retailers (think Amazon-Kohls or Amazon-Staples) as an example.

The future of e-commerce order fulfillment must also be efficient, where all supply chain constituents work together to serve the customer profitably and responsibly. Instead of walls and hurdles preventing growth and advancement, true next-generation fulfillment solutions will facilitate collaboration between all value chain members. It will unite the manufacturers, the retailers, and everyone in between, including the competitors. At Cahoot, we firmly believe that customer centricity and merchant profitability will continue to suffer unless we re-imagine and re-design our captive order fulfillment models. You can read more about the future of order fulfillment and how our solution can help you get there today.

Offer 1-day and 2-day shipping at ground rates or less.

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Trying to find extra warehouse space as a merchant is daunting. According to JLL’s recent Industrial Outlook, the market for industrial rent has never been worse. Vacancies are at a miniscule 4.3%, an all time low, and rents rose a whopping 7.1% in 2021, reaching an all-time high.

And yet, you need room to grow. Higher sales and more products demand bigger inventories, and that’s without mentioning the supply chain crisis that’s forcing merchants to load up on more inventory than usual.

At the same time, many merchants aren’t using all of their own warehouse space. It’s tough to get the perfect size warehouse, so many err on the side of caution and start with more room than they need.

That’s where on demand warehousing comes in – merchants who need space can get the warehouse capacity they need from those who have more than they need.

What is On Demand Warehousing?

On-demand warehousing is the idea that merchants can rent out space in other merchants’ warehouses to help with their storage and fulfillment needs. 

The Wall Street Journal describes it well:

“The idea is to tap into unused space in a crowded U.S. industrial real-estate market where distribution centers near population centers are fetching a growing price premium. Retailers and manufacturers are trying to position goods closer to customers without getting locked into long-term contracts or multiyear leases when rapid changes in buying patterns and trade conditions have made forecasting demand more difficult.”

On-demand warehousing platforms connect merchants to others that can provide warehousing services. A user on one of their platforms will be able to see a variety of warehouse owners that may be able to suit their needs with temporary space. They can then negotiate for warehouse space and services directly from those owners, securing the extra footprint they need.

On-demand warehousing is rising in prominence because it’s becoming more difficult to “go it alone” in the eCommerce era. Before the rise of Amazon Prime, merchants could easily lease space solely around their home base, keeping inventory centralized and easy to manage. Prime, though, has pushed customer expectations for fast delivery ever higher – and those customer expectations extend past Amazon’s marketplace to DTC stores and brick & mortar retailers alike.

To provide fast shipping at an affordable cost, merchants need to strategically deploy inventory in four or more locations across the country. Put it all together, and you see why merchants are looking to expand their footprint across the United States. On demand warehousing offers one way to build a nationwide ecommerce order fulfillment strategy.

Pros and Cons of On Demand Warehousing

On demand warehousing can solve many challenges for merchants, but it comes with its own issues. In this section, we’ll cover what it does well and what it doesn’t address.

Pros of On Demand Warehousing

1. Flexible growth

The retail landscape seems to shift at warp speed – we went from talking about 2-day delivery to same-day delivery in the blink of an eye. The pandemic has only accelerated the pace of change, and while the total retail and eCommerce markets grow rapidly, it’s more difficult than ever to predict their futures. 

Will curbside pickup from big box retailers disrupt Amazon? Will dark stores powering same-day shipping leap over customer demand for 1- and 2-day shipping? What’s just over the horizon?

If you’re buying or leasing your own space and investing heavily into operations, you’re locking yourself into one particular mode of fulfillment for years to come. On demand warehousing’s short contracts and endless options, on the other hand, present an opportunity to shift your approach at the drop of a hat and satisfy the newest customer demands.

2. Enables fast shipping

On demand warehousing is a flexible way for merchants to strategically place their inventory in 4+ US fulfillment centers. Directly owning or leasing space across the country requires a huge investment of time and capital, and it’s simply out of reach for most merchants. 4+ locations, though, are necessary to cover the entire country with 2-day shipping at ground rates. With on demand warehousing, nationwide inventory distribution is feasible even for smaller merchants.

Source: Cahoot analysis of FedEx Ground delivery times

It also helps larger enterprises strategically deploy inventory in regions where they think they’ll experience a demand spike. For instance, when natural disasters unfortunately occur, large retailers will send a massive amount of relevant equipment to on demand warehouses in a nearby area to ensure that they don’t go out of stock on essential goods. It can also help with the holiday rush if a retailer feels that they don’t have enough inventory in a critical part of the country.

3. Low capital requirements

On demand warehousing fits entirely into Operating Expenses. This minimizes the risk of investing in the wrong areas, and it maximizes the capital available to deploy towards other critical parts of the business. 

For instance, you can flexibly rent out more space to try out a new product, and if it doesn’t move, you can quickly get out of the on demand lease. If you had leased out commercial warehouse space yourself, you might be stuck in a 12-month or longer lease, and tied up money that could have gone to a new hire or to expanding the marketing budget to make up for the new product failure.

Cons of On Demand Warehousing

1. Questionable warehousing & fulfillment quality

Fast and accurate fulfillment is hard, and warehouses that weren’t designed with it in mind can’t keep up. When you use an on demand platform to contract with one or more warehouses, you just won’t know the level of quality you’ll receive until your products have been shipped. 

The benefit of enabling affordable fast shipping with a nationwide network will quickly be stripped away by errors in the fulfillment process if you contract with a fulfillment center that can’t keep up with the rigors of same-day shipping. Moreover, as the pressure to work quickly increases, the error rate at many operations skyrockets – just ask the merchants that have been dropping out of the Seller Fulfilled Prime program.

On top of that, you’re unlikely to get good customer support when working with warehouses on demand. Warehouses that sign up for an on demand warehousing platform don’t usually consider customer service a core competency, and you might not even have a reliable way to get someone on the phone to talk out issues.

On demand warehousing gives you tremendous flexibility in choosing who to work with, but it doesn’t come with a central control tower to help make sure things go right. Problem solving and troubleshooting with multiple different facilities will be up to you, and if even just one warehouse isn’t up to par, it’ll eat up a huge amount of your time – and not to mention your profit.

2. Integration complexity

If you just work with one other warehouse through an on demand platform, you’ll have to build a two-way data integration with them to ensure that you have visibility into what’s happening with your products and orders.

Now imagine that you’re doing the same thing with 2 or 3 more warehouses – that’s not a fun tech problem!

No two warehouses’ tech stacks are alike; just about everyone has a different mix of WMS, OMS, IMS, Shipping Software, and more. That means that every additional warehouse you want to add comes with another integration, which adds expense and slows the process down.

This may not be a problem for an enterprise like Walmart, which secured 1.5 million sq ft of temporary space through an on-demand platform, but it can bury a SMB. 

3. Short term solution

The benefits of a short-term contract also come with a downside: just as you aren’t locked into a long-term commitment, neither is the warehouse providing you with space and fulfillment capabilities. If they want to expand their own operations, or if they find a customer that will pay more for you, you can find yourself needing to find a new place for your inventory with only a few weeks’ notice.

Not to mention, your expanding needs will force you back into the on demand marketplace over and over to find new partners. The warehouses that you contract with at first only have so much space and only have certain capabilities, so as you expand, you’ll need to add new warehouses. You’ll find yourself going back to the platform over and over, which incurs significant managerial time costs. And on top of that, you’ll add more and more complexity instead of enjoying economies of scale.

Who Uses On Demand Warehousing?

On demand warehousing is the best fit for sophisticated enterprises that have the resources and capability to manage a high degree of complexity in their operations. They use on demand warehousing to meet specific, short-term goals without deploying capital. In this way, they can take advantage of growth opportunities and find creative solutions for logistics challenges without putting a huge bet on an uncertain or short-term strategy.

Consider our example of Walmart from earlier – they leased out a full 1.5 million extra square feet of space through an on demand portal. They know exactly what their short-term needs are, and importantly, they know exactly how they’ll move on from their short-term on demand solution. 

Ace Hardware presents another interesting example of how on demand warehousing can work well for enterprises. During the 2018 hurricane season, they used on demand warehousing to flexibly stage disaster-relief items near regions that were hardest hit by the natural disasters, ensuring that they could get people the products that they needed to rebuild quickly. Like the Walmart example, Ace used the flexibility offered by on demand warehousing to execute a very specific short-term strategy.

On the other hand, SMBs don’t have the time or capabilities to evaluate, integrate with, and manage short-term warehouse partnerships. If you’re an SMB and want to take advantage of the benefits of on demand warehousing, what can you do?

Cahoot – Your Nationwide Network, Without the Hassle

You want a nationwide footprint to power your growth with affordable fast shipping, but you don’t have the time to manage multiple relationships with on demand warehouses across the country. 

At Cahoot, we handle the hard part for you.

We’ve built a nationwide network of top-quality merchant fulfillment centers already, and we continuously monitor them to ensure a leading >99.95% on-time shipping rate. Your dedicated Cahoot account manager will be your one point of contact, and our software gives you real-time visibility into our fulfillment performance and your inventory. You may have inventory in four of our locations, but from your perspective, you’re just working with one great company.

On top of that, we’ll strategically evaluate your order flow and make recommendations to improve your inventory placement across our network. Need to add a location? You don’t have to go back to an on demand platform again to find yet another partner – we’ll just add one with the click of a button, and you’ll be ready to grow.

Whether you already have a warehouse and want to expand your footprint or are looking for a full-service fulfillment provider, we have the flexibility to handle your specific needs. 

Talk to an expert today and see how our peer-to-peer network will power your profitable growth.

Offer 1-day and 2-day shipping at ground rates or less.

Related Blog Posts

Listen to Maximizing Ecommerce Ep. #153 here.

Podcast: Maximizing Ecommerce Merchant Fulfilled Prime (FBA Alternatives)

Cahoot is a network of order fulfillment centers and warehouses belonging to other sellers who have very efficient operations of their own and high performance metrics. Cahoot offers sellers an opportunity to make money by monetising unused space in their warehouses. Cahoot offers an Amazon FBA-like service where they distribute inventory throughout the country for sellers to achieve one-day delivery, two-day delivery, cost-effectively and affordably.

Cahoot is channel agnostic and supports whatever is most beneficial for the client, including sending inventory to Amazon FBA, utilizing Cahoot’s warehouse network to fulfill other orders, and achieving two-day delivery across the USA. Cahoot is a great backup option for every seller, even if they are using Amazon FBA. Cahoot supports what is best for the client, not just Amazon, and offers a lower order fulfillment cost structure by design, providing high levels of service at an affordable price.

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Kevin Sanderson: You are listening to The Maximizing E-commerce podcast, helping you build an ecommerce business you can be proud of. And now your host, Kevin Sanderson.

Kevin Sanderson: All right. So, it’s super important that we are as profitable  as possible, get our goods from point A to point B to our customers, because if we don’t get them fulfilled, there is really no sales, and we don’t want that because we want things to get to the customers, so they come back to Amazon or wherever it is they’re buying. So, I’m excited because we have someone on today who we shared the stage with at the recent Surge Summit in Tampa. we have Manish Chowdhary from Cahoot who’s joining us. So Manish, thank you for joining us on Maximizing E-commerce.

Manish Chowdhary: Thanks for having me, Kevin. I’m really excited to be here.

Kevin Sanderson: Yeah, I’m excited to have this conversation too, because I’m trying to think of how to articulate what I’m literally feeling right now, and that is, I came to the realization, which maybe some people already realized this, that Amazon switched fairly recently from purely weight based order fulfillment fees to now… What’s the word I’m looking for? Volumetric. And volumetric could be you have it in a poly bag and there’s space in the poly bag, and so, instead of the product being maybe X size, if it goes a little bit beyond that, even if it’s just a poly bag that’s going to bend and fold and whatever, they’re charging you for that. So now it’s increased the order fulfillment fees on just about everything that I have. And I’ve started noticing this in forums and Facebook groups too, people complaining about this. So total side notes, I’m excited to talk about alternate solutions here.

Manish Chowdhary: Yeah, I mean there were, actually, believe it or not, Amazon went through four pricing changes this year alone.

Kevin Sanderson: Oh, wow. I didn’t realize it was that many.

Manish Chowdhary: That we are aware of. In fact, probably five.

Kevin Sanderson: Well, they could have snuck one somewhere and nobody noticed.

Manish Chowdhary: No, no, actually, I will give you the timeline. February 1, 2022, Amazon announced the previously increased price changes to Fulfillment By Amazon (FBA). They do that every year. And so that went into effect, what carriers call GRI, which is general rate increase. You probably heard FedEx raising their rates by 6.8%. So Amazon FBA is no exception to the rule, so they raised their rates on February 1st, 2022. Then they claimed inflation as… They had the lowest profit or a really bad quarter for Q1, and they came back with a 5% increase, what they called the inflation surcharge on April 28th, 2022.

Manish Chowdhary: And then, as we all know, Kevin, that October one, which is Q4, storage fee at Amazon FBA triples, so from 83 cents to $2.40 cents per cubic foot per month is not an increase, but it is certainly an increase over last year. And then, more recently, just a couple of weeks ago, Amazon came up with the first ever peak order fulfillment surcharge, which is six to 8%, which will go into effect on October 15. So, the thing that Amazon FBA is the cheapest solution is sellers got to take a look at their books very closely. And by the way, in addition to these four, earlier this year, this was I think January or February, what you were talking about, is Amazon made changes to a small and light program, which used to be primarily based on weight and now it’s called dimensional weight. And they implemented that, so that had a massive impact in terms of fee increases for a number of small and light shipments.

Kevin Sanderson: And mine’s not even small and light. It’s never been small and light. So maybe they’ve expanded that program. So side note, when this is all over, I’ll have to go back and find… Because I’m sure there was an announcement, and I’ll be honest, I don’t read all the announcements from them. Sorry, Amazon. But at the end of the day, they probably gave me the information, but I just didn’t check it. Well, let’s go back in time. You and I were chatting on a bus because we were going out from the hotel where the Surge Summit was. The night before, you and I were on a panel together about shipping logistics, and we were chatting about your ecommerce business model, which I thought was pretty unique and interesting. And you were telling me a little bit about your background. So before we get into your current business model, let’s go back in time and just describe how you got into the whole ecommerce logistics, shipping, order fulfillment world, because it wasn’t the same path that I usually hear with people.

Manish Chowdhary: Well, thank you, Kevin. Yeah, I’ve been involved with ecommerce since 1999. I was a student at the University of Bridgeport, Connecticut back then, and that’s when I started my first business out of my dorm room at the University of Bridgeport. And somehow we got involved with ecommerce and I loved it. And we were building a custom ecommerce website, and then we built one of the first turnkey ecommerce platforms.

Kevin Sanderson: Oh wow. Just so everybody understands, this is years before there was ever a Shopify, WooCommerce, BigCommerce. There was nothing, right? There was no out of the box ecommerce platform other than you wanted to hire a developer.

Manish Chowdhary: Right. There was Yahoo. Yahoo was what Shopify is today or what Salesforce cloud would be. All the top ecommerce brands, the Adidas of the world, I think were on Yahoo ecommerce platform. Yahoo was the Google of the day, if you remember.

Kevin Sanderson Okay, yeah, yeah. Back when people would go to Yahoo to look for things. And who’s Google? Yeah. Yeah.

Manish Chowdhary: Yeah. So I started building an ecommerce website. My background is computer science and got involved helping someone who… This was the first ecommerce platform. Before the word ecommerce platform existed we used to call it shopping cart software. Turnkey shopping cart software that you could do it yourself. Super easy. This is long before Shopify and so on. So, that’s where I got my start in ecommerce. Since then, I’ve been speaking with merchants, to the same kind of merchants, more or less. Of course, everybody’s GMV has ballooned 10 times, a hundred times in the last-

Kevin Sanderson: Just for the audience who’s not familiar, GMV means what?

Manish Chowdhary: Gross merchandise value, meaning the amount of sales on the internet.

Kevin Sanderson: Oh, okay. Yeah. Yeah.

Manish Chowdhary:

Yeah. It used to be a time when people were, they would check their email once every two days and if they got the sale… And now of course we have emails on our phone, which wasn’t the case back then.

Kevin Sanderson:

Oh yeah, yeah. Your phone literally was for calling.

Manish Chowdhary: That’s right.

Kevin Sanderson: Back in the day, there wasn’t even text messages on it. It was kind of a novelty that you didn’t have to be connected to a cord in your house or within 20 feet of the cordless phone receiver in your house. So you could go somewhere else and call other people. And that was still fairly novel in the late 90s, early 2000s.

Manish Chowdhary: Yeah.

Kevin Sanderson: So, speaking of this journey you were pretty early on in some of this, which is kind of fascinating to me. Not kind of, it is fascinating to me. You shared a story with me when we were on the bus going back to the hotel from this… We had gone on a cruise that they had us go on that evening, which was really fun. Total side note there. But you were telling me the story of you were starting to notice some patterns in where stuff was shipping from that maybe there was some inefficiencies in the system.

Manish Chowdhary: Yes.

Kevin Sanderson: Can you describe that?

Manish Chowdhary: Yes.

Kevin Sanderson: If I remember correctly?

Manish Chowdhary: Great memory, Kevin.

Kevin Sanderson: I try. I try. Yeah.

Manish Chowdhary: So yes, this was during that time we actually plotted sales data from camera sellers in the US. So I remember vaguely there were about 70 camera sellers and we plotted the sales data on the map of the US. And of course, products like digital cameras or… The world was moving from film like Kodak films to digital. And I remember Canon and Nikon were at the top of the game. I remember some products like Canon, Elf, Nikon, CoolPix, these two products that stuck with me, they used to be the best-sellers, the top sellers. And when we plotted that sales data, there was a fascinating observation that the same item, the same product was traveling from a seller, say in New York to a customer in California at the same exact time the product was traveling from a seller in California to a customer say in New Jersey. And that was happening 40% of the time, if I remember correctly.

Kevin Sanderson: Got it. So sometimes they’re literally, the trucks could be crossing each other going across the country, because there’s no Amazon FBA fulfillment algorithms.

Manish Chowdhary: Well, even if there was Amazon FBA fulfillment, even Amazon FBA hasn’t solved this problem because if you are a seller X, selling-

Kevin Sanderson: Oh, that’s true.

Manish Chowdhary: And then seller Y in California. But the fundamental macro issue was why this inefficiency? Why should the same item travel 7,000 miles cross-country in two opposite directions? Both sellers lose because they’re paying for exorbitant shipping cross-country, both customers lose because they’re paying for that. Those were the days, there was no such thing as free shipping, customers were paying, and both the customers were waiting eight to 10 days to get their items. And the environment was suffering at the same time because of so much carbon emission. So, this was not helping anyone.

Kevin Sanderson: Nobody was winning.

Manish Chowdhary: Except UPS, FedEx… And I don’t know if that’s called winning, but nonetheless, that’s when I applied for my first US patent and said, “This should not be,” because if you think from a macro perspective, that level of inefficiency should not exist regardless of who sold what to whom. And that is where I built the intellectual property and said, “Hey, I’m going to create an exchange and optimize ecommerce regardless of who sold what to whom we will… And the way we’re going to do it is we are going to reduce the miles that our product travels so that it’s cheaper and faster. That was the vision. And that is what translated into Cahoot many years later. And this is long before Amazon Prime. Amazon Prime didn’t even exist. In fact, the Amazon Marketplace did not exist. So I had seen that trend that at some point, what’s good at the macro level from first principles is always good and your time will come when the economic incentives align, when this would make sense. So that is the genesis of Cahoot.

Kevin Sanderson: Got it. So Cahoot, just so folks who are not familiar, you basically offer something… Forgive me, this could be a horrible analogy, but something if you took Fulfillment By Amazon (FBA), how they’ve got order fulfillment centers all over and you mixed it with a third party logistics (3PL) company, which most 3PLs have a location. Maybe they have a location in Miami or they’re located in California, opposite sides of the country. Or sometimes there’s one that maybe has a location in Miami, one in Oklahoma, and one in Portland. And so, they have three locations across the country, so to speak. You’re kind of mixing them together to make an Amazon FBA out of multiple third party logistics (3PL) companies. Am I understanding this correctly?

Manish Chowdhary: Yeah. So Cahoot is a network of order fulfillment centers and fulfillment warehouses belonging to other sellers who have very efficient operations of their own and high performance metrics. So a seller, let’s say a seller who has 50,000 square feet warehouse and has 10, 20, 30,000 square feet of unused space that they’re not utilizing, they can come join Cahoot as an order fulfillment partner. And for the very first time they have an opportunity to make money, with the space that’s going idle, your rent doesn’t change whether you use half the warehouse or use the full warehouse, your utilities don’t change. So this is such a, I think a wonderful idea and option for merchants who have their warehouse to participate in the order fulfillment economy and Cahoot stitches that altogether, makes it super-duper simple for fulfillment partners to operate.

Manish Chowdhary: And what’s the net benefit to our clients? Our clients are sellers. They get an Amazon FBA like service. For them, all of this is behind the scenes. They’re looking for distributed order fulfillment so that they can achieve one day delivery, two-day delivery, cost effectively, affordably, and without any penalties for, “I will only fulfill this channel and my pricing is this for this channel.” No, an order is an order is an order, and we need to help that customer meet their expectations wherever they sell, wherever they want the inventory to be, and Cahoot intelligently distributes the inventory. And the benefit is it’s a lower cost structure by design. And that’s where our clients win because they get a high level of service at an affordable price.

Kevin Sanderson: Got it. So basically, if I’m understanding correctly, what you’re doing is there’s warehouses throughout the country that are already operating, they already have space. In most cases, they’re not necessarily filling to the exact brim, so to speak. There’s other space they might have and you’re giving them a way to monetize that space, which creates efficiency from a macro perspective. And then at the same time too, being able to distribute inventory throughout the country for sellers so that they can get it relatively quickly to their customers as opposed to if they’re only in Miami. Sure, the East coast is great if they’re only in California, the West coast is great, but either way, what about the people in the middle of the country where it might take longer?

Kevin Sanderson: So you’re helping to solve some of that problem, which is a unique thing there. So help me understand, one of the things I think people might be thinking in their heads is, okay, but if I had something like that, Amazon likes FBA inventory and the customer likes Prime. So what would be the benefit to the customer or to the seller to be involved either 100% or probably better said to mix it up a little bit, because I know people look for backup plans, especially around the holidays coming up.

Manish Chowdhary: Yeah, that’s a great question, Kevin. Cahoot is channel agnostic. We are the most merchant centric order fulfillment services network on the market because we support whatever is most beneficial for the client. If a client wants to send some of the inventory to FBA, then Cahoot would gladly support that. In addition to, utilizing our network to fulfill other orders. If you think from a seller’s perspective, the seller does not differentiate that, “Oh, I need a warehouse for FBA. I need a separate warehouse that’s going to send my inventory to Walmart fulfillment services. I need a third warehouse to send my wholesale orders, and then I need to now contract with three, four different 3PLs to achieve two-day delivery across the US. So from a seller’s perspective, FBA is not the solution to all their problems because if you’re selling on Shopify, you don’t want to pay multi-channel fulfillment rates.

Manish Chowdhary: I mean, FBA on one hand, we just heard that FBA is rolling out some new services like Amazon warehouse and distribution, and they want to offer long-term storage. And on the very same day, we heard on the Surge Summit from the stage from one of the largest sellers that their inventory limits have been slashed to a very, very low number. So, Amazon is a great service, but sellers have to recognize that Amazon does what’s best for Amazon and the sellers need to have a backup option. It’s like a backup hard drive on your computer. You’re not going to go around with no backup because things can fail and things do fail, and we’ve learned repeatedly that Amazon will cut your inventory without limits, and what are you going to do? So, Cahoot is a great option to have for every seller, even if they’re using FBA. And Cahoot’s position is we will support what’s best for the merchant, B2B, B2C, and Seller Fulfilled Prime (SFP). And those are all two opposite ends of the spectrum. And I’m sure you may have questions on Seller Fulfilled Prime (SFP), which I can tackle.

Kevin Sanderson: Yeah. Okay. So yeah, Seller Fulfilled Prime (SFP). That’s the part that I think probably just got some people really thinking there like, okay, you can still get the Prime badge but be seller fulfilled. Now, the part that’s scary for a lot of people is if Amazon screws up order fulfillment, it’s their problem. If you take that on as the merchant, regardless of you physically putting the boxes as the seller and putting labels on them and putting them into the post office, or you hire someone; you as the seller in your account are responsible for it. And then Seller Fulfilled Prime (SFP) is another level because you can’t just say, “Oh yeah, we’ll ship it in seven to 10 days like you could with other merchant fulfilled options.” So what are the requirements for Seller Fulfilled Prime (SFP)?

Manish Chowdhary: Yeah, Seller Fulfilled Prime (SFP) is the gold standard of fulfillment. And Cahoot is one of the very, very few networks that can handle Seller Fulfilled Prime (SFP) confidently. In fact, if you went and spoke with the traditional third party logistics (3PL) company, they’ll flat out tell you no, and you definitely don’t want to take a chance because as you said, the risk is so high, the standards are so high, unforgiving… And I’ll explain what that means.

Kevin Sanderson: Yes, please explain the unforgiving standard.

Manish Chowdhary: Seller Fulfilled Prime (SFP)’s standard is you need to have 99.5% on time shipping. You need to have 2:00 PM-

Kevin Sanderson: Okay, hold on. So that means, you can only make a mistake one out of 200 times.

Manish Chowdhary: That’s right.

Kevin Sanderson: Right? Did I get the math right?

Manish Chowdhary: Yes, you got the math right. Yeah. One mistake out of every 200 orders you need to deliver… You need to ship six days a week, which means you have to pick Saturday or Sunday to also ship on. You need to have a cutoff time of 2:00 PM, same day cut off time. Means if an order comes in by 2:00 PM you must ship it the same day. Then you need to use Amazon Buy shipping to purchase all shipping labels. So even if you have the best fulfillment operations, if your technology is not rock solid, you’ll get screwed up there. You don’t want to email your shipping labels to your order fulfillment partner. That is a bad idea. And now, on top of that, where things get really tricky is what Amazon defines as page view metrics. So, in order to qualify and remain in good standing for the Seller Fulfilled Prime (SFP) program, every seller must meet one day, two-day delivery page view metrics. And I’ll break that down for you.

Kevin Sanderson: Okay, yeah. Help me understand what that means.

Manish Chowdhary: Meaning, Amazon Prime have moved Seller Fulfilled Prime (SFP) away from two day delivery. Two-day delivery is yesterday’s news. In fact, day before yesterday. For Seller Fulfilled Prime (SFP), for standard size items, you need to have at least 20% of page views to the consumers on amazon.com that promise one day delivery. In addition to-

Kevin Sanderson: Okay. So time out.

Manish Chowdhary: Yeah.

Kevin Sanderson: How does the page view know whether it’s one or two days? You have to be communicating that to Amazon? That if a customer lives in Tennessee, it’s going to be X number of days versus if they live in Utah?

Manish Chowdhary: So essentially that’s the reason why you need at least four to five warehouses. You cannot achieve Seller Fulfilled Prime (SFP) using a single warehouse if you are shipping using economical ground shipping. So these are all managed through the shipping templates in Amazon Seller Central. So if you go on Amazon Seller Central, you can go create all your warehouses and then you create shipping templates. And shipping templates are what informs Amazon and thereby the consumers what to promise to the shopper on amazon.com. So Amazon, of course, as you know, is fanatical about customer experience, so they want 20% of the page views to promise one day delivery.

Kevin Sanderson: Got it. So 20% of the time someone lands on that page, they’re promised one day delivery.

Manish Chowdhary: Right.

Kevin Sanderson: Now, theoretically more people are probably in population centers. That probably helps you a little bit, but you have to make sure that you can do one day delivery to a lot of the population centers and things of that nature.

Manish Chowdhary: Yeah, it gets tricky.

Kevin Sanderson: It does. It sounds like, oh, that’s easy enough, but there probably is some threading of the needle there.

Manish Chowdhary: It’s far from easy.

Kevin Sanderson: Yes.

Manish Chowdhary: I’ll give you an example.

Kevin Sanderson: Okay.

Manish Chowdhary: If you have a 2:00 PM cutoff in New York, which is where a lot of people live, right? Meaning that’s the same day promise, a customer that’s visiting your webpage, let’s say at 7:00 PM, you can’t ship that product today. So, that automatically means if you’re going to ship tomorrow, it’ll be delivered the day after tomorrow. One day became two days.

Kevin Sanderson: Got it, got it. Okay.

Manish Chowdhary: So you need to have 40%… And this is accrued math, of course. At least 40% of the US population covered within one day radius in order to scrape by the Seller Fulfilled Prime (SFP) account help metrics for standard sized items.

Kevin Sanderson: Got it. So they’re not saying by 2:00 PM you must have 20%. It’s total. So if most of your shoppers are shopping at night, you better hope that you have a better chunk of the pre 2:00 PM crowd covered.

Manish Chowdhary: Yeah, this is what makes it… And this is where the world is going. If you are sending your other orders from other channels and taking three days, I mean, you’re doing massive disservice. Why is Amazon growing so fast? Why do customers come to Cahoot is of course, not only for programs like Seller Fulfilled Prime (SFP), but once your inventory is distributed in the Cahoot network, then you can offer the same Prime like shipping promise on your website. Imagine not having to pay 15%, 20% in commission and you’re building a brand and because your inventory is already there, and that’s where the scales begin to tilt. And by the way, we covered one day metric, but there’s also two day metrics for the rest. And as I said, six-day shipping, late cutoff, all of these make things very complicated. And that’s the reason why traditional players cannot affordably offer the service without… For example, if you have to rush the order using next day air, that will erode all your margins for the next hundred orders possibly.

Kevin Sanderson: Yeah, that would be crazy. Okay. All right, so let’s get into this now. So how did you go from back when either Clinton was still the president or maybe Bush’s first term, basically a long time ago, realizing there was inefficiencies of cameras crossing over each other, going from one end of the country to another, just based on where the seller was to coming up with this idea of a fulfillment services network?

Manish Chowdhary: Yeah, essentially the idea was to create a network that would enable people to collaborate. And in order for merchants to collaborate in some fashion, you need an independent body that’s a governing body. Without governance, nothing works, you need to have the rules, you need to provide the decorum. It’s no different than a marketplace like Uber or Airbnb for the drivers and the riders to collaborate. Essentially, they’re collaborating. On Airbnb, the renters and the hosts are collaborating. It’s a different service. With Cahoot, it’s merchants who are collaborating with other merchants under the Cahoot umbrella who sets the rules and holds people accountable and so on. And that’s what we built the Cahoot network to essentially, one, enable sellers who have warehouses. There are about 2 million sellers in the US and if any of the listeners have a warehouse and have spare capacity and they have excellent metrics, I invite them to come check out Cahoot. Fill out the Contact Us form, and we can get in touch with you if you want to join as an order fulfillment partner and make some money.

Kevin Sanderson: Well, let’s get into your current network. We can get into the how someone joins as we get further into this, because I’m just intrigued. So how many warehouses are there currently in the network?

Manish Chowdhary: They’re multi dozen warehouses and that number keeps growing.

Kevin Sanderson: Okay.

Manish Chowdhary: We have a very large network. We cover the entire nation in one day, two day shipping. And so, essentially the clients get an Amazon FBA-like service sellers can deploy their inventory and if they need Amazon  FBA assistance… But we are not an Amazon FBA forwarding service. If somebody wants just Amazon FBA forwarding, then that’s not Cahoot. There are a lot of other services that just do Amazon FBA forwarding.

Kevin Sanderson: Got it. Yeah, there’s a lot of warehouses for that, but you’re doing a specific service of basically getting it closer to the customer so that when the customer orders on Amazon, they can still get Prime or they order on Walmart and then get whatever badge it is there or whatever, Shopify stores, whatever. So it doesn’t have to just be Amazon inventory. So this could be either Amazon has become cost prohibitive  for the seller for whatever reason, and they need to look into other options. Their inventory was cut back, they just want a second backup just because, like right now, I can ship in 15,000 units and last year at this time, I think I had a thousand units I could send in total.

Manish Chowdhary: But-

Kevin Sanderson: You’re all over the place. up and down.

Manish Chowdhary: When is a thousand going to reduce to 750, you have no idea.

Kevin Sanderson: Yeah, exactly. Exactly. I almost wake up in sweats on Monday mornings… Not wearing sweatpants, but in cold sweats, what is my number going to be this week? Sometimes it goes up by 5,000 and sometimes it goes down by 5,000, and thankfully I’m never right on the edge. So anyone that says to me like, “Oh, should I just send all my stuff on Amazon?” I’m like, “Absolutely not, because they could just cut it.” And they’ve done that before when they get close to the holidays and they’re like, “Oh, we’re filling up more than we thought we would.” So they just cut it off and now all of a sudden you can’t send in the popular stuff that you were hoping to send in, so you have to have something to do. And so hopefully your dining room has a lot of space, but for a lot of people that might not be the case.

Kevin Sanderson: So, for a seller, let’s just say, we can use Amazon as an analogy just because I think most people, probably most of their sales are coming out from Amazon and we’re talking about Seller Fulfilled Prime (SFP) and things of that nature. So Amazon processes, I go into Sellers Central and I say, “Here’s what I’m sending you, Amazon. Here’s the quantities, where do you want me to send it?” And hopefully it all goes to one place. Sometimes they split it up and they say, “Send it here, here, here, here, and here.” Walk me through what does the process look like If I have just for the sake of example, a thousand units I want to send to Cahoot? What happens?

Manish Chowdhary: The process is very similar to Fulfillment By Amazon (FBA). You’ll create an inbound in Cahoot, and Cahoot will guide you through where the inventory needs to be based on your requirements. Some sellers don’t want to distribute. They’re not targeting two-day delivery for whatever reason. Distributed order fulfillment is more expensive than shipping everything from Florida, as you know, because there’s a cost of movement of goods and so on.

Manish Chowdhary: I mean, that’s why Amazon… Even Amazon FBA charges you more to send you inventory to one location versus sending it to all the different locations that Amazon wants. It’s not free even at Amazon FBA. So it’s essentially the same network, similar network, but we charge the same low fees for all channels, whether it’s an Amazon order, it’s a Walmart order, whether it is a Shopify order, eBay, we have all the order fulfillment integrations, so we will connect. We’ll get the order, we will optimize to make sure that the right packaging, you’re paying the lowest shipping cost possible, and we give you all the visibility once the order is shipped and we write the information back to Amazon. So it’s a pretty set and forget, it’s very similar to just managing your inbounds on Amazon and then watching-

Kevin Sanderson: So if I have a thousand units, does Cahoot say X number here, X number here, X number there if I want it distributed? Or does Cahoot distribute around for me as time happens? As one area gets depleted, for example.

Manish Chowdhary: It’s a collaborative process because if you’re doing Seller Fulfilled Prime (SFP), we will provide you with more guidance, but you have more control. With Amazon, you have little to no control. Amazon dictates because Cahoot is doing full service fulfillment, remember Cahoot is not just doing Amazon sales. So, you may have wholesale orders, you may have stuff that needs to go to Amazon FBA. So for us, the problem is a little bit more complicated than just serving the customers on amazon.com.

Kevin Sanderson: Got it. So you have something that’s about a pound on Amazon, and let’s just say that’s four bucks for the fulfillment fee. Is it a similar fulfillment fee? Is it a little bit more, a little bit less on Cahoot? And where does the cost of the actual storage compare?

Manish Chowdhary: Yeah, I mean, Cahoot overall is going to be more cost-efficient because when you look at Fulfillment By Amazon (FBA), you got to look at all the fees, you got to look at the storage fees, you got to look at how long it takes for you to receive your end box. And frankly, Amazon FBA is very attractive for what I call small and light. Amazon FBA fees undoubtedly are very attractive. So Cahoot will be very comparable to Fulfillment By Amazon (FBA), and if you have larger products, if you have slightly what Amazon would call standard oversize or oversize items, and that’s where Cahoot rates are going to be dramatically lower.

Manish Chowdhary: Cahoot overall is very, very affordable on par with Amazon FBA, but there are few pockets where Amazon has its own delivery trucks, whereas Cahoot relies on carriers. Third-party carriers like UPS, FedEx DHL and all that. So, the way we like to educate our clients is to think about all the different channels you want to sell on, all the different things you need to manage and maintain and so on. And we are there not to replace Fulfillment By Amazon (FBA) if that doesn’t make sense. We are there to support whatever order fulfillment strategy that’s best for the seller.

Kevin Sanderson: Okay, interesting. So yeah, this is an interesting network that here you are, you saw an inefficiency in the system, so to speak, and you’ve created a system around it, which helps to essentially give people an alternative to Fulfillment By Amazon (FBA) in general, if maybe their oversized items and the pricing doesn’t make sense with Amazon FBA or they just want an alternative because they can still keep the seller fulfilled badge, knowing that at the holidays you could have stuff in fulfillment center processing for two weeks and it just sucks.

Manish Chowdhary: Every seller, including you, Kevin, should have an Amazon FBA backup because otherwise you’re putting all your eggs in one basket and that’s never a good idea. Certainly not in Amazon’s basket. You want to have a backup so that you can turn it on whenever you think is required, whenever you need it, because you can’t send all your inventory to Fulfillment By Amazon (FBA). There are all kinds of delays getting inventory from overseas if it’s coming. And almost every seller should be selling on multiple channels. Nobody should limit it to one channel only. And we know that MCF, multi-channel order fulfillment, is more expensive, so why should it be more expensive? If the cost of shipping is the same, it’s just… So the way we like to think about it is that Cahoot has created the most merchant friendly order fulfillment solution on the market because we’re agnostic. We are there to support the seller, help them sell more, help them make more profit, and if we can be part of their journey, we’d be great.

Kevin Sanderson: Awesome. Now, one thing I think people would be curious about, who are sellers that are thinking about going onto this… Because Airbnb, I think we’ve all had great experiences, Uber, we’ve all had great experiences, but you always hear the horror stories. Who are these people? And there’s always this bad apple. So what does it take just either if someone’s interested in it potentially because they have a warehouse and may be interested in  joining a network like Cahoot? Or they are a seller and they’re just like, who are these people who are going to be storing my inventory? Kind of walk us through what that looks like? How does someone get onboarded? What do you look for in an order fulfillment partner and what are they held to?

Manish Chowdhary: Thank you. That’s a great question, Kevin. Becoming a Cahoot order fulfillment partner is a by invitation only program, so even if you went to our website, you may not find… Because we have to be very selective in who we allow from a fulfillment partner, because as you heard, supporting seller fulfillment Prime is playing with fire. It’s not for the faint of heart. So we need to ensure that we are selecting these partners very carefully. There are two million sellers out there in the US, many million globally. So we invite them to come, submit, contact us, we will get in touch with you. Cahoot does a lot of due diligence to make sure that the program is the right fit for them and they’re the right fit for us.

Manish Chowdhary: If they have excess capacity and they’re doing a great job of fulfillment for themselves, they should consider applying because there’s more than one way to make money. One is to sell more goods, and the second is to fulfill. You’re already fulfilling orders, might as well just fulfill a few more. And I think that’s a great way to make extra cash, and it’s super-duper simple. So, from horror stories, it’s really some things that are within Cahoot and our fulfillment partner’s controls. Some are not, like inclement weather. That happens. I live close to New York, we get snow storms here. Just yesterday there was a hurricane in Florida, which-

Kevin Sanderson: Oh, yeah, we’re recording it. Oh no, it hasn’t even made land yet. In fact, last night I was-

Manish Chowdhary: Okay, sorry.

Kevin Sanderson: Dodging tornado. Yeah, I happen to be on the east coast, this is on the west coast, so I’m very familiar with what you’re talking about. So we’re lucky to be even having this conversation that I have internet right now. Anyway, sorry, side note. But yeah, stuff happens.

Manish Chowdhary: So carriers sometimes may have difficulty picking up. When the pandemic hit, carriers were completely blocked. They had no space in their trucks. So if you suddenly ran a special sale and instead of getting 10 orders a day and you got thousand orders, I mean, FedEx, their space doesn’t have elastic capacity that they can elongate by click of a button or manufacture trucks digitally. So, those are real world physical challenges that we deal with. Those are things that planning for capacity… But our order fulfillment partners have been great. They have always stood their ground and they have delivered. So generally speaking, most of the problems that we’ve seen have been outside our control, and we speak with our fulfillment partners regularly. So it’s not just a digital platform that you have no connection with, human connection, whether it is staffing.

Manish Chowdhary: People do fall sick. During the pandemic we had people in the warehouse that had COVID, they had to be isolated. These are… Amazon  shutdown several warehouses during that time, so all the same challenges. It is about great governance, clear expectations, good communication, and great technology and system. From a technology standpoint, we often encounter bugs or issues with buy shipping, but we have to use buy shipping for Prime orders to get the label. So our technology has to be resilient to deal with those challenges. Sometimes it’s an inconvenience. Let’s say buy shipping is not returning the economy ground shipping method because it’s only returning expensive two day air label, so that costs our sellers money, and we are very sensitive to that. However, it’s also important to protect the account, those metrics, because in order to save 20 bucks, if the account is endangered of the health of the account, that is going to be a far more expensive problem than 20 bucks.

Kevin Sanderson: True. Because if you get one out of 200 that you get a grace on.

Manish Chowdhary: So those are the problems that we’ve seen, but our technology is resilient, our fulfillment partners are awesome, and we’ve been very fortunate that way, and we want to keep it that way.

Kevin Sanderson: Awesome. So for somebody who wanted to learn more, either as a seller or potentially if they had a warehouse, where would they go?

Manish Chowdhary: Go to www.cahoot.ai. If you’re interested in availing yourself of Cahoot’s, affordable fulfillment services, just fill out the Contact Us form. There’s also a live chat option. If you’re looking to join as a fulfillment partner, we are glad to have you. We’d love to invite you. Just fill out the Contact Us form, and then a representative, a fulfillment expert, will be in touch and we will determine if we are the right fit. But we are here to help our customers. If we can add value, that’s what we like to see.

Kevin Sanderson: Awesome. And spell Cahoot, just for folks who are not familiar.

Manish Chowdhary: Yeah, Cahoot is a play… You know how Slack, when you are using Slack at work, you are in cahoots. So C-A-H-O-O-T.ai. It’s singular. Cahoot.ai is the URL. You can check us out. And yeah, if there’s any questions we can answer for them, we’ll be happy to.

Kevin Sanderson: Awesome. If you’re listening to the audio podcast, that’ll be in the show notes. And if you’re listening or watching on YouTube, it’ll be in the description down below. So Manish, this is an interesting conversation and I am fascinated with what you’ve built here. So, thank you so much for coming on.

Manish Chowdhary: Kevin, thank you so much for having me. And thank you to all your listeners for listening to me. And if Cahoot can be of help, please just check us out and we’d love to chat and share notes, and we learn as much from sellers as much as we have to share our expertise with them. So I always enjoy those conversations.

Kevin Sanderson: Awesome. Thanks so much.

Manish Chowdhary: Thank you. Bye.

Speaker 1: Thank you for listening to the Maximizing E-Commerce Podcast. If you found this episode helpful, you can get more episodes by subscribing on iTunes or wherever you enjoy listening to podcasts.

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Related Blog Posts

As ecommerce gains a larger share of the total retail market, the demands on warehouses keep growing. While the underlying principle of what a warehouse is remains the same, the actual processes run within warehouses look far different from what they did even 20 years ago. Warehousing services have evolved from simple storage solutions into integral components of the global supply chain.

Products need to be stored securely and handled properly, and multi-channel ecommerce orders need to be delivered on time, all of which directly impact a merchant’s revenue and profitability. Efficiently handling long-term storage, Business-to-Business (B2B) replenishment, and online direct-to-consumer (DTC) orders is a tall task for any one warehouse, and rising consumer expectations are pushing costs higher. 

What seems like a simple decision – where to store your products before last mile delivery – can get complicated in a hurry. Understanding the breadth of warehousing services, their benefits, and how to choose the right outsourcing partner is crucial to optimizing for success.

What Are Warehousing And Fulfillment Services?

Simply put, warehousing is the term for the storage of inventory before the goods are sold. Warehouses focus on storing inventory inexpensively, securely, and in a way that supports necessary access to the goods. Warehousing can occur at many steps along the supply chain: manufacturers need to store products, warehouses are often needed to help with middle mile distribution, and inventory is stored in a warehouse until it’s shipped to a customer. Within the enormous category of ‘supply chain’, there are many different types of warehouses that may or may not specialize their offerings. But the four primary types of warehouses are:

Public warehouses
These facilities offer short-term and long-term storage solutions for multiple clients, making them a cost-effective option for businesses with fluctuating inventory or order fulfillment needs.

Private warehouses
Owned and operated by a single business, private warehouses provide maximum control but require significant investment.

Bonded warehouses
Used for storing imported goods before customs duties are paid, allowing businesses to manage international shipments efficiently.

Fulfillment warehouses
Specializing in ecommerce and DTC shipping, these warehouses focus on quick and high-volume order fulfillment (often same-day).

Warehouse specializations include things like:

• Temperature-controlled storage for perishable items, pharmaceuticals, and food products.
  
• Sustainable warehousing that supports brand reputation and image by using energy-efficient operations such as microgrid implementation for warehouse energy independence and decarbonization, and eco-friendly packaging such as fully organic mycelium-based materials.
  
• Secure storage for high-value items such as electronics, luxury goods, and jewelry that may require different security measures.
  
• Hazardous materials storage that requires warehouses to comply with safety regulations (e.g., chemicals, flammable goods, lithium-ion batteries).
  
• Food-grade warehouses require certification and stringent hygiene and temperature control standards if they prepare food products.
  
• FDA Food Facility Registration (FFR) for facilities that store and ship food products.

Essential fulfillment services, such as picking, packing, shipping, and storage, are fundamental offerings provided by fulfillment warehouses. Their services are crucial for developing an effective ecommerce fulfillment strategy. These are the warehouses that have seen the most change over the past few decades as they’ve shifted from focusing entirely on B2B orders (pre-ecommerce era) to being able to fulfill a large number of Business-to-Consumers (B2C) orders straight from their shelves. 

How has that shift impacted warehousing & fulfillment services?

Definition And Purpose Of Warehousing Services

Warehousing services refer to the storage and management of goods in a designated facility, playing a critical role in the supply chain. These services provide a central point for receiving, storing, and shipping products, ensuring that goods are managed properly and maintain their quality and availability as the market demands. By acting as a hub in the supply chain, warehousing services help streamline the flow of goods from manufacturers to customers, reducing delays and improving overall efficiency. Warehouse services also include closely related inventory management and logistics functions.

Logistics services (a.k.a inventory management and logistics functions) play a crucial role in warehouse fulfillment operations by offering efficient and cost-effective solutions for attending to the modern merchant’s needs (e.g., inventory preparation such as kitting and barcoding, or FBA forwarding, etc.). Not all warehouses provide these services, but they play a vital role in the success of today’s multi-channel ecommerce sellers. They should not be overlooked when considering whether to partner with a provider.

Not to be confused with distribution centers and distribution services that focus on facilitating the movement of goods between fulfillment centers, businesses also require these services and will need to separately evaluate their operational needs to determine the right mix of ecommerce order fulfillment and bulk storage and distribution services.

Inventory Management And Storage

Much of the floorspace in a warehouse is dedicated to inventory storage, but how inventory is stored has changed dramatically thanks to the shift toward ecommerce order fulfillment. Efficient warehousing is essential for clothing retailers, for example, to manage inventory effectively.

Warehouses focusing on B2B replenishment store their inventory efficiently in large bundles – think of a full pallet of goods or a pallet of goods from which multiple cases can quickly be picked. Relatively little is needed to receive the goods and put them into storage: if orders are pallet-sized, then they might not even need to be unpacked at all.

Contrast that with inventory storage at a warehouse that fulfills ecommerce orders – goods have to be stored in such a way that they can be easily picked in eaches (single unit quantities). When an ecommerce warehouse receives pallets of inventory, they have to unpack the pallet, put away cases of goods, and then open some of the cases so that they can easily access the products inside. The speed with which a warehouse picker can get to the items and pull one or more out of the carton becomes of paramount importance because they have to repeat the process hundreds of times per day.

Thus, the explosion of ecommerce has been accompanied by an explosion in warehouse automation as providers try to make their operations ever more efficient. When storing products, warehouse personnel must be able to pinpoint the exact location of all SKUs quickly, count the number of units on hand, and respond to recalls. Each of those tasks can be made considerably easier with the intelligent use of technology, like barcode scanning. Another [very high-tech] example making waves in 2025 is augmented reality-powered inventory management: implementing AR technology for real-time, hands-free inventory tracking and optimization in warehouse environments. These are very expensive systems, but the ROI on the investment is substantial.

Ecommerce Order Fulfillment

Moving from a handful of large B2B orders every day to thousands of B2C orders per day is a massive shift. Just like the changes to warehouse storage strategy, a change in fulfillment strategy has led to a significant increase in the complexity and cost of warehousing.

Warehouses need to employ more fulfillment personnel and deploy more technology in order to get products from storage into boxes or mailers and affixed with shipping labels as quickly as possible. Amazon Prime’s continual push to cut delivery times shorter means that warehouses can’t wait to fulfill orders; each customer that presses “buy” needs to have their item picked, packed, and handed over to a national carrier that same day.

Amazon SFP support

Speed is the name of the game when it comes to the Amazon Seller Fulfilled Prime (SFP) program. Amazon’s requirements are so intense that barely a half-dozen providers in the entire country have the infrastructure and resources to support it.

Returns Processing

Ecommerce warehouses must be able to process returns as one of its services – those that don’t leave their clients unable to provide a critical service to their customers. Marketplaces again have led the market with super-easy no-fault returns policies, so online merchants of all stripes are under heavy pressure to offer the same on their DTC sites. So, warehouses have to be able to receive returns, assess whether they’re damaged or not, and process them back into available stock whenever possible to minimize loss from returns.

Consolidation

Consolidation involves combining multiple smaller shipments into one larger shipment to reduce transportation costs and improve efficiency. Goods are picked, sorted, and packaged before being transported as one unit, leveraging economies of scale. Common uses include retail restocking and FBA forwarding, where shared truck space minimizes expenses and environmental impact while maintaining delivery reliability.

Deconsolidation

Deconsolidation is the breaking down of large amounts of inventory into smaller batches for efficient regional distribution. Goods are unpacked, sorted, inspected, and repackaged for delivery to separate fulfillment centers. This service prioritizes speed and accuracy, enabling rapid redistribution of inventory for faster and cheaper delivery to customers.

Cross-docking

Cross-docking is a logistics strategy where incoming goods are transferred directly from inbound to outbound transportation with minimal or no storage. Products arrive at a warehouse, are sorted, and immediately reloaded onto outbound vehicles bound for final destinations. This warehouse service prioritizes speed, eliminates warehouse holding time, and is ideal for perishables, time-sensitive retail goods, or high-turnover inventory.

Transloading

Transloading is the transferring of inventory between different transportation modes (e.g., freight container to truck van). Goods are unloaded from one carrier and temporarily stored if needed (usually hours or days, not weeks or longer), and then they are reloaded onto another carrier. Transloading enables cost-effective long-haul shipping.

Benefits Of Using Warehousing Services

Using warehousing services can bring numerous benefits to businesses, including:

• Cost Savings: By leveraging shared storage space and economies of scale, businesses can significantly reduce costs associated with storage, labor, and transportation.
  
• Improved Efficiency: Warehousing services optimize inventory management, reducing the need for frequent transportation and minimizing handling costs. This leads to a more streamlined and efficient supply chain.
  
• Enhanced Customer Satisfaction: Timely delivery of products is crucial for customer satisfaction. Warehousing services ensure that products are stored strategically and shipped promptly according to defined service-level agreements (SLAs), improving customer loyalty and satisfaction.
  
• Scalability: Warehousing services offer the flexibility to scale up or down according to changing market demands. This adaptability is essential for businesses looking to grow or adjust to market fluctuations like peak season demand.

How To Choose The Right Warehouse

Choosing the right warehouse to support your business can be a daunting proposition. There is a huge variety of services provided by warehouses and 3PLs, and it can be difficult to figure out what each company specializes in at first glance.

One crucial factor to consider is the availability of specialized services. These services can include order picking, packing, and specialized handling for unique products like beauty items, perishables, or fragile glass beverages that require custom shipping containers to avoid breakage in transit, which go beyond basic inventory storage and fulfillment.

What are the key criteria that you should keep in mind?

Key Considerations

• Technology: Advanced warehouse management systems (WMS) ensure efficiency, real-time tracking, and visibility of inventory and shipment status.
  
• Scalability: The warehouse should be able to accommodate growth and seasonal demand fluctuations.
  
• Geographic Location: Proximity to major distribution hubs and ports reduces inbound shipping costs, and locations in major metro areas decrease overall shipping costs and delivery times.
  
• Shared vs. Dedicated Warehousing: Shared services are cost-effective and flexible, while dedicated space and resources provide peace of mind and special attention but come at a higher cost.

Sales Channels

Where are you selling now? What’s your growth strategy?

Many online sellers get their start on Amazon and rely on Fulfillment by Amazon (FBA) for their warehousing and fulfillment. It’s only suitable for selling on Amazon, though, so they quickly find that they need an FBA alternative for their non-Amazon sales volume. The same is true of sellers that rely on Walmart Fulfillment Services for their Walmart volume; its warehouses are reserved for its own channel only. If you want to sell direct-to-consumer, or if you want to sell on more channels than just Amazon and Walmart, you can’t solely rely on those warehouse solutions. Today’s marketplace space is very diverse: Target Plus, Nordstrom, Macy’s, Wayfair, and more are thriving.

Stepping outside the big marketplaces, you’ll find that many warehouses and 3PLs specialize in either B2B or B2C orders, not both. Picking a specialist provider can be a strong strategy for sellers who are certain they’ll never want to cross over from retail to online sales or vice versa, but most have ambitions to grow on both channels.

If you’re currently selling both B2B and B2C or have plans to do so, you should know that there are providers that can do both at a high level. Many sellers start out with a warehouse that specializes in the one channel on which they sell (like FBA for an Amazon seller or a single Shopify 3PL for a DTC brand). Then, they add different warehouse and fulfillment companies as they grow to new channels that their existing provider can’t address. 

On the other hand, flexible 3PL networks like Cahoot will scale with you and seamlessly add the warehouse capacity you need for whatever channels you’re adding. Thanks to our peer-to-peer model, we have a dense network of many different types of warehouses – so we can consolidate your fulfillment needs into a single organization and customize our approach to your evolving needs.

It’s not so simple, though – most sellers have fast-movers and slow-movers in their catalog. Their hero SKUs generate an outsized chunk of their profits, but they need the “long tail” to bolster their brand and provide holistic value to customers. These slower movers are most efficiently stored in less expensive areas of the country, and moreover, they’re difficult to distribute around the country because that strategy significantly increases inventory carrying costs. In short, you want an entirely different warehousing strategy for your slow movers from your fast movers.

Some fulfillment networks like FBA specialize in fast movers only; most Amazon sellers have learned this painful lesson from getting hit with restrictive FBA limits that push all but their best sellers out of the service. Many of the tech-enabled 3PLs like Flexport have adopted similar models, and they all have similar markers: they have strict limitations on the inventory they’ll accept (and in particular, they don’t like large items), they charge huge long-term storage fees, and they put punishing surcharges on storage and fulfillment during peak seasons.

You can choose a mixed warehouse strategy in which you use fast-turn-optimized fulfillment centers like FBA for your fast movers and more efficient, low-cost providers for your slow movers. This can work, but it also requires a large amount of managerial time, and you’ll find yourself frustrated when you have too much inventory in one warehouse and too little in another. Alternatively, more innovative networks like Cahoot bring together warehouses that specialize in fast movers, slow movers, B2B orders, and everything in between. That way, you can consolidate your operations with one provider, simplify your life, and enjoy economies of scale.

On top of these considerations, the recent resurgence of volatile supply chain issues adds another wrinkle to your warehousing decision. Many sellers are opting to stock up on as much inventory as they can in advance because they know that “just in time” shipments from overseas will likely not arrive when they are estimated to. This adds another need for super-efficient storage – if you try to keep 6+ months of inventory in a warehouse optimized for B2C fulfillment, you’ll rack up ruinous storage fees. If you’re going to be bringing in more inventory than usual, our advice is to find a long-term storage warehouse in a relatively low-cost area close to your port of entry. There’s no avoiding the fact that you’ll have to pay more to store this inventory than if you brought it in “just in time,” but you can mitigate the cost with this approach. And if you’re stuck with extra inventory and no place to put it unexpectedly (for instance, from reduced FBA inventory limits), then you’ll need on-demand warehousing.

In the same vein, efficient management of raw materials is also crucial in inventory management, especially for industries like automobile manufacturing and food services. Proper storage and distribution of raw materials ensures timely order fulfillment and smooth operations.

Technology Needs And Warehouse Management Systems

Whether you sell online, wholesale, or both, you can’t avoid having a complicated tech stack in the 21st century. Even ten years ago, many warehouses were still operating via Excel spreadsheets – customers would email over the previous day’s orders, and the warehouse would get to work shipping them out. Warehouse operations have changed dramatically, and you need to carefully understand what technologies your warehouse can integrate with.

It starts with sales channels, ecommerce platforms, and order management systems: does your chosen warehouse have a pre-built integration with the services that you use? Does it have an open API and developer support so that you can connect lesser-known channels or custom technology to the warehouse? If you want efficient operations, at a minimum, your warehouse should automatically receive orders from you and then automatically update all of your customer management, inventory management, and ERP software with shipment information. It’s not easy, and many warehouses and 3PLs have struggled to make the digital transition.

On top of that, the technology that your chosen warehouse(s) use to operate day-to-day can have a significant impact on your total costs. Most warehouses and fulfillment centers make the shipping label decision for you because the label has to be printed on location. If they’re relying on an older shipping software, they likely have to pick shipping labels manually. This often leads to you paying more than you need to because they won’t always pick the optimal label. Next-gen shipping software completely removes the human from the process and autonomously identifies and creates the best shipping labels. They will automatically rate shop all of the supported carriers and pick the lowest-cost delivery service that meets your SLA. In this way, your warehouse’s technology substantially impacts your total fulfillment cost.

Warehousing Services Recap

Your needs for warehousing services can vary dramatically based on what and where you’re selling – from the humble long-term storage warehouse to the highly automated fulfillment center. 

Many sellers take a piecemeal approach to warehousing as they grow; they’ll start with a 3PL that meets their initial use case but quickly outgrow it and have to add multiple providers. Keeping up with a broad set of warehouse providers is time-consuming and inefficient, especially when transferring inventory between locations and across software systems. But new warehouse and fulfillment networks are here to address the challenge.

Cahoot’s innovative peer-to-peer network has the flexibility to cover a wide range of use cases, all under one company (and multiple warehouse roofs). 

Cahoot’s fulfillment network is built for the ever-shifting needs of growing ecommerce sellers. We’ll help you delight your customers with a stellar, Amazon-like delivery experience no matter where you sell. We have pre-built integrations with major marketplaces, shopping carts, listing services, carriers, and ecommerce platforms to fuel your multi-channel growth.

We don’t stop there, though. We’ve expanded our dense network to add significant B2B capabilities so that we can efficiently support retail replenishment. 

We can do this while others can’t because our warehouses are operated by merchants just like you with excellent fulfillment operations. There are millions of unique merchants in the US, and chances are that we have a few merchant clients just like you.If you need warehousing services built to help you scale into the future, contact us for a free consultation today.

FAQ

What are warehousing services?

Warehousing is the process of storing goods in a warehouse for the purpose of distribution, sale, or manufacturing. Warehouses are used for storing goods for an extended period of time and are typically equipped with storage areas, shelving, loading docks, conveyors, forklifts, pallet jacks, and other inventory-handling equipment. Businesses can benefit from warehousing in several ways, including more efficiently managing inventory and optimizing the shipment process.

What do warehousing companies do?

Warehousing companies provide facilities to store goods. They do not sell the goods they handle. These businesses take responsibility for storing the goods and keeping them secure. They may also provide a range of services, often referred to as logistics services, related to the distribution of goods.

Is warehousing the same as storage?

Warehousing is typically a temporary holding place for goods, with products moving in and out regularly. Storage can be short-term or long-term, depending on the specific requirements. Warehouses are often large facilities with ample space for storing and maneuvering goods.

Why would a business use warehousing?

Warehousing provides companies with a centralized location to store, manage, and distribute their goods to their end customers. This reduces the complexities involved in inventory monitoring and management and cuts down staffing needs and operation costs.

How much does warehousing cost?

On average, businesses can expect to pay between $5,000 and $25,000 per year for smaller co-warehousing spaces of less than 3,000 square feet and between $50,000 and $500,000 per year for a larger warehouse lease, urban areas commanding the higher end of the range.

How to calculate warehousing cost?

Measure Your Space: Start by measuring the total square footage of your warehouse. This measurement is the foundation for calculating many of your storage costs. Calculate Cost Per Square Foot: Determine the cost per square foot by dividing your total operating costs by the warehouse’s total square footage.

You’ve put countless hours into creating your product, perfecting your Shopify website, and marketing to grab attention. But have you paid enough attention to your fulfillment strategy? It’s not just a cost center – the difference between poor and great fulfillment has a huge impact on your customer experience and revenue growth.

Depending on what type of product you sell, you have a lot of options for fulfillment. The pros and cons can be tough to parse, and it gets complicated in a hurry.

In this blog post, we’ll explore why fulfillment is so important for ecommerce, your options for Shopify fulfillment, and how to choose the fulfillment service that’s right for you.

Why Your Shopify Order Fulfillment Service Matters

Simply put, a great fulfillment strategy is the difference between keeping up with Amazon and getting buried by it. If you can’t deliver orders quickly, customers will immediately look for a similar product with better shipping options on a marketplace. Surveys show 83% of online shoppers compare prices to a competing product on Amazon when shopping online.

Amazon, Walmart, and eBay have set the bar high for order fulfillment, and unfortunately customers now expect the same high standards from online brands as well.

Ignore fast and free shipping at your own risk – 70% of US consumers expect free shipping even on orders under $50, and 48% of all cart abandonment is caused by unexpected shipping costs.

Having great Shopify order fulfillment will improve your cart conversion and customer satisfaction, leading to more immediate revenue as well as repeat customers.

So you’re convinced – you need to offer fast & free shipping on Shopify, and it can’t break the bank. What are your options?

Fulfillment Services for Shopify Sellers

There are several main fulfillment options every Seller on Shopify can choose from:

• Self-Fulfillment
• Dropshipping
• Using a 3PL Provider

Each fulfillment strategy has its own unique pros and cons. Let’s go over these Shopify fulfillment options in detail:

Self-Fulfillment

If you’re selling small, low-cost items to a fairly local customer base, then self-fulfillment may be the best Shopify fulfillment strategy for your business.

Small items are easier to store yourself, and if your customer base is local, you won’t have to pay too much for shipping. Moreover, products will arrive relatively quickly to the customer because they don’t have too far to go.

Self-fulfillment also means you’ll have full control over product and fulfillment quality. You can choose where and how your products are stored, ensuring that they’re in the best condition possible when they get to customers. If there are errors in fulfillment, you have the power to immediately fix issues. Additionally, self-fulfillment can lead to higher storage costs, especially as your inventory grows, impacting your overall profitability.

The main drawbacks of self-fulfillment are that it’s extremely time-consuming and it isn’t cost-effective in the long run. If you’re fulfilling your own orders, your success comes with a price; more and more of your time will be consumed by managing operations. Every second spent on logistics is a second not spent on growing your top-line revenue. So most brands that start out self-fulfilling choose to outsource fulfillment as they grow.

Dropshipping

Dropshipping is a good option if you have the resources to find reliable suppliers and can successfully manage your relationships with them. With dropshipping, the entire fulfillment process is handled by the supplier or manufacturer, which means you don’t have to invest as much time in it – but you also don’t have control over it.

The key benefit of dropshipping isn’t to be underestimated; you can simplify a huge part of the logistics value chain. Instead of having to worry about shipping products from your manufacturer to a middle location, and then from that middle location to the customer, it goes straight from the manufacturer to the customer.

The main drawbacks of dropshipping are a lack of control over product quality and a poor delivery experience.

For quality, you don’t get to inspect the product before it gets to the customer. You have to rely entirely on the dropshipper, and when things go wrong, you’re left on the outside looking in.

Just as importantly, your customers won’t be delighted by fulfillment provided by dropshippers. Since they’re almost always shipping from one location, the delivery won’t be fast for customers across the country, which can negatively impact customer satisfaction. Since they’re often shipping long distances, shipping is also more expensive than it needs to be as well.

Using a Third-Party Fulfillment Provider

If you’re looking for a Shopify order fulfillment service that offers the benefits of self-fulfillment without all the hassle, then using a third-party provider is your best bet.

The best 3PLs will give you access to a nationwide network of warehouses and carriers, so shipping products will take less time than if you were going it alone – in most cases within one or two days. Furthermore, if a 3PL places your inventory across the country strategically, you’ll always pay ground rates for shipping, so fast delivery will come at low prices.

Third-party logistics providers also work with shipping carriers to negotiate discounted shipping costs, further improving your profitability.

In addition, some 3PLs can even support dropshipping services.

Like dropshipping, trusting a third party means giving up some control over your product before it gets to the customer. This challenge can become apparent with 3PLs that aren’t built for ecommerce, as products get damaged in their rush to fulfill orders. Modern 3PL networks that specialize in ecommerce, though, have very low defect rates and may even improve on your own delivery record.

Of the three Shopify fulfillment options, using a third-party provider is the best option for most Shopify stores. It’s a question of when, not if for most Sellers. Many assume that they need thousands of orders before they can get a good deal with a 3PL, but today’s tech-enabled fulfillment networks are built to be easy to use for merchants of all sizes.

So, if you’re looking for a 3PL, how do you choose one that’s right for you?

Shopify’s Fulfillment Network

The Shopify Fulfillment Network (SFN) is a 3PL fulfillment service designed to streamline the order fulfillment process for Shopify Sellers. With a 3PL network of warehouses across the United States (SFN no longer operates in Canada as of 2023), the Shopify Fulfillment Network allows businesses to store, manage, and ship their products efficiently. This network is built to provide fast and reliable delivery, ensuring that customers receive their orders promptly and in excellent condition. However, this service was announced in 2019 and still outsources fulfillment through Flexport.

Using the Shopify Fulfillment Network (powered by Flexport) offers several advantages for online Sellers, making it an attractive option for Shopify businesses looking to enhance their fulfillment capabilities:

• Fast and Reliable Delivery: SFN’s strategically located fulfillment centers enable businesses to offer fast and reliable delivery to their customers. This can significantly boost customer satisfaction and loyalty, as timely deliveries are a key factor in the overall shopping experience.
• Simplified Order Fulfillment Process: SFN handles the entire fulfillment process, from storage to shipping. This allows businesses to focus on other critical aspects of their operations, such as marketing and product development, without worrying about the logistics of order fulfillment. However, there are some fulfillment limitations that come with this simplified fulfillment process.
• Increased Efficiency: By utilizing SFN’s network of fulfillment centers and advanced technology, businesses can streamline their fulfillment process. This not only reduces costs but also improves operational efficiency, allowing for better resource allocation and management.
• Scalability: SFN is designed to scale with businesses as they grow. Whether you’re a small startup or an established enterprise, SFN can accommodate your needs, allowing you to expand your operations without the hassle of managing fulfillment logistics.

Choosing the Right Shopify Order Fulfillment Service for Your Store

It’s one thing to decide to work with a 3PL provider and another thing entirely to find one that has the right Shopify fulfillment network that your business needs to scale. Here are the key factors you’ll have to consider:

• Shipping speed SLAs (what shipping options will they enable?)
• Fulfillment costs and methods (how much do different options cost?)
• Inventory management options (do they help you efficiently manage inventory?)
• What other providers do they integrate with, and how?
• Customization & special services (e.g., assembly, packaging)

The best Shopify fulfillment services are built for fast & free ecommerce – that means they’ll enable fast delivery for your customers, but do so in a low-cost way. They should have pre-built integrations with Shopify and ecommerce platforms to make your life easy. Finally, you should look for a provider that helps you intelligently manage inventory to optimize capital.

For more in-depth guidance on how to choose a 3PL, use our 3PL RFP template to easily collect the information you need to make the right choice.

Cahoot – Your Best Option for Shopify Order Fulfillment

Cahoot’s fulfillment network of over a hundred warehouse locations is built for ecommerce. We’ll help you level the playing field with marketplaces and delight your customers with a stellar, Amazon-like delivery experience – right on your Shopify store.

Price: Our innovative peer-to-peer model offers low-cost, fast fulfillment by design. As a result, our pricing is typically lower than that of traditional 3PLs, 3PL networks, Shopify Fulfillment Network, and even marketplace fulfillment solutions like Amazon Multi-Channel Fulfillment.

Shipping Flexibility: Cahoot also offers the option to ship on your existing carrier accounts, allowing you to maintain your purchasing power and volume discounts.

Speed: Cahoot’s Shopify fulfillment service will enable you to turn on conversion-boosting fast and free shipping badges. We’ll strategically distribute your inventory to our warehouses locations across the country so that no matter where an order comes from, it’ll be fulfilled by a nearby warehouse. The customer gets their item in one to two days, but you pay cheap ground shipping rates.

Reliability: Our barcode scanning technology powers 99.95% on-time delivery and a 99.99% accuracy rate.

Easy Onboarding: With Cahoot, you can go from sign up to shipping in just two weeks. Our pre-built integration with Shopify makes setup a breeze.

Customer Service: You’ll have a dedicated customer support team that is always ready to help you every step of the way.

Cahoot is committed to helping Shopify Sellers grow their businesses with our fast and affordable ecommerce fulfillment service.

If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait to show you how Shopify fulfillment was meant to be.

Frequently Asked Questions

How can I fulfill orders on Shopify?

The main ways to fulfill Shopify Orders are directly shipping yourself, dropshipping, or using a 3PL.

Are there any limitations with Shopify Fulfillment Network?

Not all products are eligible for the SFN; you can review the list here.

Are all 3PLs the same?

No! 3PLs are different, and choosing the right 3PL for your business is an important decision.

Listen to podcast here.

Podcast: The Uber of the Shipping and Delivery Industry, Manish Chowdhary, Founder and CEO at Cahoot

Ecommerce Innovators is a podcast hosted by John LeBaron, Chief Revenue Officer at Pattern, that explores innovative strategies and trends in global ecommerce by bringing together experts in the industry. The podcast features a special guest, Manish Chowdhary, Founder and CEO of Cahoot, the world’s first peer-to-peer order fulfillment services network. In the podcast, Chowdhary explains that Cahoot is an ecommerce network where ecommerce brands and retailers can join as order fulfillment partners and monetize their spare warehouse capacity, similar to Airbnb. Brands and retailers that are looking for order fulfillment services can benefit from a lower cost structure and a large scale warehouse network. Cahoot provides a fully managed order fulfillment service, much like Uber, and ensures all stakeholders are participating and being successful. Chowdhary got into this space in 2002 when he discovered a significant number of identical products crisscrossing coast-to-coast, causing shipping inefficiencies in delivery and costs. He then applied for his first patent and started Cahoot.

Speaker 1:

Welcome to Ecommerce Innovators, a podcast that brings together the brightest minds in the industry to explore innovative strategies and trends in global ecommerce. Our host is John LeBaron, chief Revenue Officer at Pattern, the premier partner for global ecommerce Acceleration.

John LeBaron:

Thank you so much for joining the show today. This is Ecommerce Innovators. I’m your host, John LeBaron, and I’m the Chief Revenue Officer at Pattern. And we have a special guest today that I’m very excited to introduce to you. Manish Chowdhary is the founder and CEO of Cahoot. And it says this is the world’s first peer-to-peer order fulfillment services network. So welcome to the show today, Manish.

Manish Chowdhary:

Thank you, John. Thanks for having me.

John LeBaron:

Yeah, you bet. So Manish, I got to meet you in person a few weeks ago at our Accelerate Summit. I don’t know when this will air, but it was really fascinating. You’re clearly very bright and you know a lot about this industry, I think you spend a lot of time studying it. And so I’m excited to introduce you to the listeners of this show and have them learn a little bit more and share some of the goodness that you have spent your whole life kind of dedicated to. So you’re a crazy serial entrepreneur and a little bit of a mad scientist. Tell us a little bit about what a peer-to-peer order fulfillment services network is.

Manish Chowdhary:

Thank you for your kind words, John. You’re giving me more credit than I deserve, but I’ll take it for now. peer-to-peer order fulfillment or peer-to-peer network is essentially brands and retailers helping other brands and other retailers. And in context of fulfillment, what Cahoot has done is created a large scale network where a brand can join Cahoot as a fulfillment partner, so if a brand or a retailer has a warehouse or multiple warehouse, and they have spare capacity, they can actually monetize their spare capacity for the very first time. Similar to if you were to put up your spare bedroom and your house on Airbnb.

And on the other side, we’ve got brands of retailers that are looking for order fulfillment services. They get to benefit from a lower cost structure and a very large scale network. That is essentially what a peer-to-peer network is, and Cahoot is the governing body so that it provides a fully managed service, and I’ll use the Uber example. So the seller or the brand that’s looking for fulfillment services doesn’t have to negotiate directly with the driver. If you are an Uber driver, Cahoot provides the entire service in a box and ensure that all the stakeholders are participating and being successful.

John LeBaron:

Yeah, that’s amazing and I think it’s so innovative. And we look at order fulfillment and logistics, crazy amounts of innovation. Every time I look at the fastest growing inc., 5,000 type companies, it feels like 50% or more of them have something to do with last mile delivery, or freight forwarding, or anything, direct import, all that sort of stuff. So I think the reason why it’s so expensive and it’s only getting more complex and more expensive, and that capacity just really comes back to bite you if you have too much because there’s so many fixed costs.

So how did you get into this space? And obviously you have to be very, very smart to figure out the world’s toughest problems, at least ecommerce’s toughest problems. How did you get into this? And tell us a little bit about your career trajectory.

Manish Chowdhary:

Thank you, John. The way this journey started, believe it or not, this was long before Amazon Prime existed, long before the consumers were ever demanding two-day or one-day free delivery. This is back in, I take you back to 2002, and I’ve been involved in ecommerce since 2000. So my other company is an ecommerce platform and we were studying consumer order fulfillment data. So if you may recall in early 2000 the transition, the industry was making transition from film cameras to digital cameras and digital cameras was the hottest thing, if you recall. So essentially what we did was we took sales data or order data from about 70 or so top ecommerce vendors, and this is back at a time when there was an incentive for people to buy out of state because you don’t have to pay sales tax.

John LeBaron:

Absolutely, yeah.

Manish Chowdhary:

So when we plotted that data off these digital cameras, I remember Canon L or one of those Nikon COOLPIX cameras, those were two popular products.

John LeBaron:

Yeah. Of course, yeah.

Manish Chowdhary:

And when we plotted that, what we saw, it was fascinating. What I saw was a 30% of the time a consumer in California was ordering that Nikon COOLPIX from a vendor in New York. And at the same day, a customer in New York or New Jersey, was ordering the same identical product from a vendor on the West Coast. And just a light bulb went off in my head is like 30% of the time, these two shipments are crisscrossing coast to coast, that makes no sense. At the time, it was taking eight days to deliver the item using UPS Ground, it was costing a lot of money, and consumers were waiting 16 extra days. And everybody, it just did not feel to me, I went back to first principles and say, “This should not happen. This is just not natural.”

And that’s where I applied for my first patent at that time, that what if I were to create an exchange where all these vendors could pull their orders and Cahoot would, at the time the word Cahoot didn’t exist, the company didn’t exist, and we would act as a clearinghouse for the orders and facilitate most optimum delivery keeping competitors and allowing competitors to collaborate in an anonymous manner. That is the origin of where the idea came from.

John LeBaron:

Oh, that’s fascinating. So really getting Cahoots with one another and try to co-mingle the inventory that they… Almost, from a blind standpoint, right?

Manish Chowdhary:

That is exactly right, because if you take an example from a parallel industry, like a stock market, you have clearing houses and stock exchanges which do settlements of trade at the end of the day or whatever the closing period is, why could we not apply the same principle to ecommerce? And fast-forward 10, 15 years, this has become a necessity now because when you think about the macro problem that how do you speed up delivery? You need to think from first principles, rather than thinking how something has been so far along and this is how we’ve done things, but true innovation is really thinking outside the box as you refer to.

John LeBaron:

Yeah. Well, and again, a parallel from a different industry, super nerdy too. But again, I spent a fair amount of my career in telecom and yeah, there was always this real big challenge of, I think about Netflix, every user trying to stream and the loading times of how long it takes. At the end of the day, it’s all zeros and ones anyway, but it’s got to get across all the way across that network. And how do you get people from Phoenix and Philadelphia and Seattle all trying to binge-watch their favorite shows and reduce the buffering? And the solution truly was push it closer to the metropolitan areas, push it what we call the edge of the network and allow that transit time to be more instantaneous and almost just again, reduce that buffering.

And technology has eased some of that just in terms of capacity in the network, but I’m with you. And it’s like, it’s so obvious, it stares you right in the face. But that’s kind of why Amazon I guess is one in a way, is because they become that centralized clearing house as a whatever, aggregate platform, but it doesn’t really work in a fragmented world of all of the different retailers trying to ship, the e-tailers trying to ship, and the brands themselves, all the D2C brands. And I think that’s, yeah, ultimately that’s probably where I would love to steer the conversation. We’ll get to some of the quote, unquote, “Canned” innovation type questions that we always kind of cover because you get a different flavor no matter what.

But going down this path, I guess, how do you as a brand or what are some of the big challenges, all these peripheral players outside of Amazon face in trying to get goods to the customer? I’ve got to think Amazon has set this standard that you talked about of same day, overnight, next day, whatever you want to call it, delivery. How can other folks, besides obviously using your service, I’m trying not to be too objective here or subjective.

Manish Chowdhary:

Yeah, of course.

John LeBaron:

Yeah. What are the biggest challenges they face in trying to keep up or compete with a behemoth like an Amazon?

Manish Chowdhary:

Frankly, John, I think a lot of ecommerce brands and retailers really are not up to speed perhaps on the solutions that already exist. If you break down the last mile fulfillment or trying to achieve Amazon-esque, Amazon-like fulfillment experience or consumer experience from the checkout all the way to getting the product in the hands of the consumer, at a high level, first and foremost, you need to… Let’s compare a DTC site, if you’re on a DTC site and in your shopping cart, you need to display when will the product arrive, what I call date-certain shipping, and technologies exist even now. Yes, it may not come all from one single player like Amazon, but I know that some of the bigger ones like Target and Best Buy have done a fabulous job.

And frankly, for a couple hundred bucks a month, you can implement this date-certain shipping. So that’s number one, because consumers do not convert when there’s uncertainty. It’s just like you can see what’s happening in the stock market. The world is not going to come to an end, but because we don’t know when the war is going to end and so on, and therefore there’s a lot of uncertainty. So the solutions exist. Step one, add date-certain shipping to your shopping cart. Number two, bring the shipping on parity with Amazon. It is easier than they think. If you’re spending 15% commission on Amazon, that’s 15% for you to play with and apply that to the shipping subsidy or whatever you want. If you want to think of that as a subsidy, I mean FBA is not free. The consumers are paying a membership fee and all of that, so that’s step one.

And then distribute order fulfillment if you break it down, you got to get your inventory closer to the consumers. So if you want to target a two-day guarantee delivery, if you place your inventory strategically in five warehouses, you can achieve that and you can provide the guarantee. Don’t worry about that one order that you need to overnight are 2% of the orders, it’s retailers and ecommerce brands get too caught up into the exceptions and the 1% to 2% problem, and they throw the baby out with the bathwater and say, “Oh, it’s not possible.”

That is the reason, if you go back to FedEx, the original of FedEx guaranteed delivery at 10:30 AM or your money back. And I can assure you that FedEx did not give a lot of money back and the day they put that guarantee, that’s when the sale just took off. And same thing with Domino’s, pizza delivery within 30 minutes or your money back. I guarantee you Domino’s is still existing, they didn’t go out of business because of the guarantee. So that guarantee is crucial, and then having the technology to ensure and execute against the lost mile delivery.

And then customer communication, that’s another place where we find brands and retailers are not totally up to par. Okay, you’re doing a great job, you’ve distributed your inventory and the order goes out. If you don’t communicate as frequently about the progress of that order fulfillment and delivery along the way, it’s like free-falling in the forest. In fact, we know from data and from anecdotal evidence, Prime does not live up to its promise. I don’t know how many orders you’ve ordered, John, that by Prime it says it’s going to arrive tomorrow, it doesn’t arrive. I would argue that at least double-digits failure in that promise exists, but they communicate with the customer through the text messaging, through the email, and they communicate frequently.

And then finally, the icing on the cake is when you get a picture of the item outside your front door and people think, “Wow, only Amazon can do it.” If you piecemeal all of these solutions together or go to a provider that can offer, I can assure you that you can offer a Prime-like experience.

John LeBaron:

Yeah, I think that’s amazing. So let’s keep going down this path because I think it’s, to your point, a lot of ecommerce brands and a lot of listeners by extension on the show may not truly understand what’s available. And if you’re the world’s first, that is kind of tricky. So I don’t know if you have a public customer you can talk about, or we can just use the example of a drone or a digital camera or whatever, but how does it work? If you are a brand… Well, we could go through both examples, the person with extra capacity or the person on the demand side of the network or the fly side of the network with a brand. Give us an example of how this works, how they use the software, what it looks like, how much of the inventory are they pushing into the quote, unquote, “Edge” versus kind of keeping consolidated? How does it work?

Manish Chowdhary:

Right, great question. So let’s talk about a real example. I’ll use one of our clients, Cali’s Books is one of our client. They’re a brand, they’ve created innovative children’s books that are audiobooks. Think about Cinderella, and you can actually play that book in different languages. So if you want to learn Spanish, your kids want to learn Spanish, it’s Cinderella in Spanish. And also, people can record. So if you were away from home, John, you could record it and you can send that as a gift to your kids or your loved ones. So it’s a very brilliant concept that they have created. So great demand, they have their manufacturing overseas, and they bring in container loads and they would, first step is to bring it into West Coast because the product comes from China and other places.

So we would first house it just like Amazon into a centralized warehouse, and then we would distribute that inventory across the, in this particular case, Cali’s Books inventory is sitting in six to seven different Cahoot warehouses, strategically located greater New York area, Southern California, Midwest, upper Midwest, the Chicago area, the Dallas region, and somewhere in the Middle North Carolina, and one more. So now you’ve strategically moved that inventory based on demand planning. What is the movement of inventory? You don’t want to send same 10 units to all locations equally because the population and demand is not equal. So that is crucial.

And then in their case, we connect directly to the sales channel, whether the order is coming from Shopify, Amazon, or Nordstrom. So they sell B2B and B2C, so they need the ability to ship both wholesale and retail. And right now with the inventory fully distributed, we are doing Seller Fulfilled Prime (SFP) for this customer so that they’re achieving the Prime target. And in fact, as you know, Amazon holds Seller Fulfilled Prime (SFP) merchants even more accountable than themselves and FBA, and they have had no issues whatsoever, they have been operating flawlessly.

And then, because that Seller Fulfilled Prime (SFP) is being offered on Amazon, they are now in the process of implementing that same guaranteed two-day, one-day delivery on Shopify, on other marketplaces like Target, Walmart, and all the others. So you can see that delivery once you’ve got the infrastructure in place, you can tackle all the sales channel very easily.

John LeBaron:

Yeah. No, I mean it’s really innovative and super fascinating. I guess going back to your comment and the way the business model works, are those actually your warehouses? Or to the other side of it they’re… When you say a Cahoot warehouse, it’s basically someone who’s partnered with you that has spare capacity and they’re doing both the fulfillment and the inbound receipt and all that other stuff, right?

Manish Chowdhary:

That’s right. The reason why we call them a Cahoot warehouse is because Cahoot takes accountability on behalf of the seller because the seller, it’s akin to Uber driver, that driver is driving for Uber. It’s very similar to these are independent warehouses that belong to other merchants that are super successful. The average tenure of these merchants is over 10 years selling online themselves, so they know what it takes to manage and maintain good standards in Amazon because many of them are doing it themselves. And in many cases, Cahoot warehouses are both an order fulfillment provider and also a client. So they have a warehouse in California that is providing fulfillment services. They also need order fulfillment services in New York, so it’s such a symbiotic relationship that they understand that they cannot let Cahoot down, they cannot let our clients down because if that happens, somebody could let them down and Cahoot acts as the governing body ensuring that that doesn’t happen.

John LeBaron:

Yeah, I love that. Well, again, this is just so great. I love your expertise, I love your passion, enthusiasm, it’s definitely coming through here. If you think about on the flip side, there is Amazon, Amazon’s been building like crazy, they definitely had their work cut out for them once COVID hit and trying to scramble and build capacity into the network as quickly as possible. And I’m sure they did not have Cahoot, they should have leaned on you guys. You guys could have given them instant capacity, but they built it out themselves, we’ve now heard in Q1 that they overbuilt capacity. What does that mean for Amazon sellers? What does it mean for other channels?

Manish Chowdhary:

So it means two things. One, the good news is Amazon is unlikely to provide to apply capacity constraints on inbound inventory as they did last year because they were struggling last year, this capacity really just opened up a lot this year. So a lot of the sellers are very concerned about not being able to send enough inventory for the holiday season, the Q4 and so on. So I don’t expect any such bottlenecks this year, so that’s the good news. The not so good news is they have very publicly stated that this over-building is what resulted or partially resulted in them making a loss the first quarter of this year. And Amazon hasn’t had that big of a loss in many, many quarters. So they attributed that to that loss.

And of course, it is safe to say that FBA is somewhat subsidized people, their shipping is very affordable, but I expect because of Amazon’s focus on profitability, sellers should brace for price increases in FBA at least once or two times between now and end of the year. So the good news is you will not have capacity constraints. The not so good news is prepare to pay more for FBA services.

John LeBaron:

Yeah, absolutely. Not only shipping fulfillment, I would say storage as well. Someone’s got to pay the piper if you’ve got too much warehouse capacity, storage fees will likely go up as well, so I think that’s a great observation. And as you look forward to, I often look toward Asia as this harbinger of things to come. I look at JD.com, they’ve got six-hour delivery across like 90% of China. So it’s I think the notion of two days now, one day to same day, to in fact we have an order fulfillment center in Salt Lake City now for Amazon. And back to your point, it’s kind of interesting to watch what Amazon is doing. I’ve lately seen, especially near the weekend, that Amazon will push Prime deliveries out to, if you order even late on a Thursday night, you may not get it until Monday, but there’s this new option that says you can pay $2.99 more and get it in four hours, or you’ll get it overnight, it’ll be on your doorstep.

So it’s kind of fascinating to look at how different things are getting subsidized, but a big piece of what Amazon is doing in many markets is they’re kind of creating their own delivery network as well, all hours of the day and night. And back to your Uber analogy, is that something your company is doing today or do you anticipate it will soon is kind of extend the order fulfillment services network or the notion of the ride-sharing or the Airbnb of storage into the delivery network itself and last mile delivery, is that on the roadmap or is that already happening today?

Manish Chowdhary:

Oh, we are certainly doing a lot more than a traditional third party logistics (3PL) company. So for example, in order to meet SFP, Seller Fulfilled Prime, or let’s just call Prime delivery expectations from Amazon, we need to be fulfilling orders six days a week at least. You need to meet at least 30% one-day delivery targets. And Cahoot is still, Amazon has two decades of lead time over Cahoot, but Cahoot is cashing up fast. So the objective with our peer-to-peer network is this network grows very rapidly and in highly densely populated urban areas, we can achieve same-day delivery using couriers. It’s just a decentralized model versus Amazon’s model is largely vertical integration, which I believe that they’re both, there’s the Apple model and there’s the Microsoft Windows model.

And we believe that we will create more opportunities for partners collectively as part of our network that there will be a large incentive for a lot of folks to participate and also gain from that experience. So when an order fulfillment partner joins Cahoot network, they’re getting a line share of the revenue that we collect, and so there’s an incentive for them to promote that. And also, it’s sort of like if you’re an Uber driver, you want to do a great job so you get a high rating because if you don’t get high rating, then Uber will not select you for the next ride. So Cahoot implements a very similar principle and model.

So I believe that both can coexist, there is room for both of them. And from our perspective, Cahoot is a more capital efficient and it’s a more cost-effective model because you can achieve any target you want, John, you can achieve 30-minute delivery if you want to send a charter plane from Salt Lake City to somewhere.

John LeBaron:

Right, absolutely. Well, that begs the question then Amazon with excess capacities is still trying to figure out how do I use this? How do I increase my strangle hold? Prime penetration is massive in the US. You just saw this announcement with Grubhub yesterday of like, how do I get either more loyalty because they’re raising Prime prices? How do you get more stickiness? How do you bring new people onto the platform? It does feel like D2C or other non-marketplace customers are one of the last few frontiers that they haven’t completely dominated. And so you see strategic initiatives starting to emerge, like buy with Prime. So now D2C brands can opt into this buy or e-tailers can opt into this thing. Is that a good idea? What’s your opinion on that?

Manish Chowdhary:

It’s a horrible idea, it is absolutely a DTC killer in my opinion. And that was the topic of my speech at the Accelerate Conference, and it’s not meant to be self-serving, because essentially this is an attempt by Amazon to infiltrate the entire consumer journey. And I know that the talk is going to be published on your website shortly for those folks that are interested in learning more, essentially the way I see this is if you allow Amazon into your DTC site, what’s the difference between selling on Amazon and selling on your DTC site? Who owns the customer? Who controls that customer journey?

And it’s actually, I’ve called it the Trojan Horse. It’s essentially a Trojan Horse that, let’s take a very simple example. If the shopping cart belongs to Amazon and Prime, for long, DTC brands have always encouraged consumers to increase their average order value, the higher cart size by putting free shipping on orders over $49, over $99, but move over to Prime, there is no minimum. So now all of a sudden, if you were Lucky Heart, the popular cosmetics company, if you have a minimum of $49 and you introduced Buy with Prime, your cart size is going to go down dramatically. Now, if people abandon the cart, that ad is going to show up on Amazon. And if you are not on Amazon, your competitor ad is going to show up.

And we know that every Prime shopper, there are about 200 million Prime shoppers in the US, they visit amazon.com once a week. 85% of them visit once a week and $45, over half of them make a purchase once a week. So the likelihood of your competitor product being targeted on amazon.com to that shopper that actually originated the journey on your site is a lot higher. So jury is still out, the program is still in its infancy, it is by invitation only, but it does not appear to be a good idea for DTC brands to take those leap right now.

John LeBaron:

Yeah, it’s definitely deal with the devil or letting the enemy come sleep in your bed or whatever crazy metaphor you want to make. I think it is eyes wide open for sure, you got to figure out how close you want to get to the potential enemy. And not really enemy, right? But it’s like your dependence, the more Amazon has dependence on you as a consumer and certainly as a brand, the less wiggling room you have to be able to chart your own destiny. And I’m with you, the true kind of gold standard of a D2C brand is owning that relationship, owning the experience, owning everything in that customer journey. And the more you kind of outsource that, the harder it is to truly maintain differentiation in the eyes of the customer and a strong brand.

So while this has been so great, I know we don’t have a ton of time left, maybe a handful of other questions just around the topic of innovation. I know we’ve been speaking about it in the periphery here and so many innovative approaches and thoughts here. What advice do you have for brands that are looking to either reduce their dependency or relationship with Amazon or really just trying to build their brand and double down on the D2C front? What advice do you have for brands that are looking to try to grow their brand via ecommerce?

Manish Chowdhary:

That’s a great question, John. I mean, the way I see it’s not so much about dependency, reduction of dependency on any one party. It’s about chartering your own path, it’s about having more independence. I know we talk about in this new world, employees want more flexibility at work and how they work and so on. So ecommerce brands should hold the keys and they should be the one that should own the customer and own the relationship because that’s the definition of a brand. Because if a middleman controls all the customer data, all the relationships, you can’t market to that customer when you want, you can’t have a direct engagement with that customer. It’s hard to say who is the brand.

And when you look at it, when people buy on Amazon, I’m sure there’s data and stats out there, nine out of 10 times the consumer does not remember or know what product they bought and which seller they bought it from. They just say, “I bought it on Amazon.” I have yet to hear, “I bought it from Acme, Inc. on Amazon.” They say, “I bought it from Amazon.” So my advice is really, if you want to succeed in DTC, DTC is a fascinating world, but it’s also full of graveyards. We know that even the likes of the darlings, like Allbirds, are struggling from a profitability standpoint, but focusing on lifetime value is so important.

Basics, going back to basics, that it’s not just about customer acquisition, it’s about customer retention and lifetime value. And that’s why you should be present wherever the customer is, including your website. You cannot have your website not be on parity with marketplaces because marketplaces are a competitive environment. It’s sort of like if you’re competing against others, against other brands, you need to achieve parity. So from an order fulfillment and logistics standpoint, it’s a mandate for brands to take their website with the same level of seriousness and from a fulfillment and logistics, they cannot throw in the towel and say, “Oh, we can’t do it.”

The reality is solutions exist. And believe it or not, in many cases they’re cheaper than FBA and can help you achieve the same outcomes. And I would say that take that really seriously, apply that date-certain shipping, live up to that promise. When you say guaranteed delivery, don’t exclude the few items because again, think about the 2% rule, think about 98% of your outcomes and not worry about the 2%, and I think that will start turning the tide. And then consortium of stores, there will be, I expect innovation where there will be new networks that will be formed. So for example, I know Shopify has been experimenting with Shopify Audiences, and Shopify Promise pay, and so on. So there will be other avenues to tap into, not only on marketplaces.

John LeBaron:

Yeah. Well, it’s so great. So I would just say maybe to close this out, you have been an entrepreneur, again, for a long time. You’ve hired a lot of people, you’ve fired a lot of people, you’ve seen probably a lot of highs and a lot of lows. I always like to ask this question, what is one leadership principle that you particularly love, do you feel like’s been a real big part of your success?

Manish Chowdhary:

I think for me personally, think big and really think and be contrarian. When I started Cahoot with the original idea that I shared competitor collaboration, that really is a highly contrarian. We are taught to compete with each other. Brands or retailers are competing, how do you collaborate? There are ways when collaboration makes sense and there are times when that doesn’t make sense and it actually leads to a greater good and also a win-win relationship. I’ll give you an example. Airlines, we have codeshare. When you want to go from here to Bali, Indonesia, you’re going to probably have to take a flight from Salt Lake City to Los Angeles, and then you’re going to take a flight from there to somewhere else. I know you’re nodding your head.

So if you just take out those constraints that why it cannot be done, and start thinking from first principles and be bold, and if you believe in it and you can prove that it can actually work, then it’s a matter of figuring out how to make it work. And most of us, or most people, and my leadership principle has been challenge your team to think big, think bold, and be contrarian and believe in that self. It’s better to be a monopoly than to be competing in a highly crowded red ocean.

John LeBaron:

Yeah, absolutely. Well, I think you’ve definitely thought big, taking on the world’s biggest logistics company, so to speak, and certainly one of the wealthiest individuals in the world is no small task, and so you’ve definitely thought big. And the good news is it sounds from everything I can see, you’re delivering on it. So where can people find you? Where can they learn more about, help our listeners understand if they want to investigate where should be their next turn?

Manish Chowdhary:

Well, check us out on our website. That’s www.cahoot.ai, that’s Cahoot with no S, C-A-H-O-O-T.ai. And I invite people to come find me on LinkedIn, follow me. I write frequently, I speak quite frequently. And John, thank you so much for having me on this show, it’s such an honor to be here.

John LeBaron:

No, thank you so much. And I’ve learned a lot personally, and that’s what I usually like to do as well. Part of the reason for doing this podcast is just to learn more and get exposure to super smart people that are innovating in this industry. And I think we can all learn a lot from what you shared with us today, so thank you so much for joining. Again, this is Ecommerce Innovators and if you’ve liked what you’ve heard today, go ahead and subscribe on your favorite podcast player and feel free to send feedback as well. Send some comments or shoot me a line at john@pattern.com and we will look forward to hearing you on the next one. Thank you so much, everyone.