19 Nov Michael Anderson | Direct-to-Consumer: Helping Brands Connect Digital Demand to Supply
As an eCommerce company selling products across multiple online channels (for example, Amazon, your own site, eBay, etc.) with a single SKU there are several challenges, says Michael Anderson, CEO of Etail Solutions.
You have to track inventory, account for different methods of fulfillment, maintain an effective supply chain, control the price, and have the correct content when each eCommerce platform has different rules and requirements.
It’s a very complex issue, especially for high volume sellers, and a person can’t make those decisions at the speed and volume required. Automation, says Michael, is the key. We get into all the details behind that, as well as…
- The power of “distributed order management”
- Creating a single source of truth – and why it’s vital
- The most critical element in maintaining brand integrity
- The biggest obstacles to scalability and automation – and how to overcome them
- And more
Mentioned in this episode:
Joris Bryon: Hey, this is your eCommerce excellence podcast. And today I’m really excited to talk to Michael Anderson. Michael is the CEO and co-founder of Etail and that’s a platform for multi-channel eCommerce inventory, order fulfillment, and price management. He has a background in the industry and he has spent most of his career in enterprise business software. He founded email solutions by 10 years ago, basically to solve some of the more complex problems multi-channel digital commerce sellers experience and yeah, he’s got a ton of experience in eCommerce. So I’m sure this is going to be a very interesting episode. Michael, welcome to the podcast. Really happy to have you here.
Michael Anderson: Absolutely. Thanks for having me.
Joris Bryon: Right. Yeah, maybe just to get started. Can you tell everybody a bit more about Your background where you come from in your career so that our listeners could understand a bit more about you how… how did you get started? And how did you get to this point?
An Intro To Etail
Michael Anderson: Sure. So I actually started my career. When I was about 19 or so I started getting into ERP software. And my first opportunity was actually to put in a barcoding system into a retail location. Actually working with Great Plains the DOS version probably hates me a little bit and really kind of never looked back at you know, business software I was just kind of made sense to me and so I stuck with that I did a stint doing some developer development work when Great Plains brought out their new windows product called dynamics at the time. This is far before Microsoft bought them and then went into the sort of the consulting side after I graduated from college. I went into salting side of doing European implementations and you know, as as you stated, I spent most of my career then as a result in the business software space, and, you know, in one role or another, but everything from development to sales to implementation, and my first company was actually a hosting company hosting end software, way back in the dot com days, so I’ve kind of been in it most of my career and, you know, as it relates to kind of how we got to where we are now. I guess I come at the eCommerce space really more from the enterprise software background moving towards eCommerce as opposed to dealing with e commerce and then trying to figure out complexities of transactions automation and things like that.
Joris: Right. Now, you’ve been at Etail, which you founded 10 years ago. Can you explain to us what Etail exactly does?
Michael: Sure. So if you’re familiar with ERP, I would just say that the simple version of this is that we’re kind of the distribution suite of any ERP system but for the multi-channel world then for those kinds of not familiar with that terminology, what we effectively set out to do was to solve the challenges of selling across multiple online properties with a single, you know, per single SKU.
So if you’ve got a single product, and you’re selling on Amazon and eBay and your websites, and maybe nowadays, it’s Walmart, and also Google is launching a marketplace, right? You have many different listings on many different channels, but you have to be able to control inventory, you have to be able to control the price, you have to be able to control the content because every channel wants that content a little bit differently. And you have to be able to deal with the full ordered life cycle as well. And that was really the challenge that we set out to solve. In a prior life. I was the vice-president of sales and marketing and ERP company. And we kept running into these types of opportunities. This is circa 2009ish, kept running into these scenarios where people You know, wanted to sell on their b2c site and they wanted to sell on eBay which had been around for a long time Amazon and really just launched their marketplace as well. And the ERP system that we’re working with and really is I realized and sort of thought about the different ERP systems I’ve worked with over the years.
There’s no ERP on the planet that was built to deal with those complexities of the multi-channel world. And, and so that was really the problem that we kind of set out to solve. We were fortunate enough to land a fairly good-sized opportunity that sort of helped us launch the company. And you know, that first customer had five Amazon accounts and three eBay accounts on a website and they were selling shoes, right. So they had various products and they needed, they needed to sell on Amazon, they needed to sell on eBay, obviously. But with Amazon and needed to do competitive repricing, they needed to do drop shipping they needed to cross-docking. So we went from what we thought was originally going to be a fairly simple ballistic concept to solving some really complex problems.
And interestingly enough, the way that we started to grow was I just did a sort of a talking head type of a video out of my basement where we started a company in front of a whiteboard, just diagramming and talking about the problems we’re resolving. And I threw it out on YouTube and kind of forgot that I did it. And we started getting phone calls. And it turns out that there just really wasn’t anybody. And I would argue even today, there really isn’t anybody who is dealing with these issues of managing digital demand, or, you know, these digital online channels, which takes a lot of different forms these days, all the way through the full fulfillment lifecycle, in other words, dealing with supply chain-related issues and, and so, you know, we want one thing led to another as they say, and we kept attracting these clients who were dealing with volume, so dealing with size-related issues. And dealing with fairly complex scenarios of, you know, multiple methods of fulfillment, multiple channels that they were selling on, and need to manage that at scale. And so we’ve kind of carved out this little niche for ourselves of, you know, we have a higher-touch relationship, generally with our clients. Most of them consider us an extended part of their team. But we saw volume and his pain.
Now that that can range from folks who are doing a half-million to a million dollars a month in online sales to you know, top 10, Amazon sellers, or on Amazon and I think the largest client had a catalog at one point in time 22 million skews that we had to manage. And that equated to over 100 million listings across multiple dozen channels around the world. And so, you know, thank goodness, not everybody needs that kind of scale, but it did. It did help us to sort of push the envelope and really figure out how to solve things at pretty obscene scales and So that’s really kind of established a nice little niche for us.
Joris: Yeah. So can you give us a few like concrete examples of of what the advantages are of using Etail versus not using Etail?
To Etail or Not To Etail?
Michael: Yeah, so I think to understand that you have to understand a little bit about what it is that we do at a slightly more detailed level, but I’ll keep this fairly simplistic. Effectively what we do is we connect digital demand to supply which sounds really simple but digital demand I’ve even just moved away from the term eCommerce because too many people just associate that with a website, what digital channels and you know, digital commerce, especially with what Google is doing these days. Really the online and offline worlds are really starting to get crushed together.
And even there even aspects of brick and mortar retail now that are digital in nature, not when you talk about buy online, pick up in-store and things like that. What we realized early on, so whether it’s a marketplace like Amazon and eBay, or whether it’s a shopping cart, like Shopify, Magento, or big commerce, or whatever. Or even if it’s just an EDI wholesale drop shipping scenario where you’re selling on Bed, Bath and Beyond, and they’re just having you drop ship your products to the customer, all of those different channel types, those sales channels, they deal with 500 touchpoints, and this is what we kind of figured out early on. And the five touchpoints are you just need to be able to know what it is that you have, right?
So the sales channel needs content, right, and they needed in the way that they needed, which is their own taxonomy and their own way of organizing that information. So you’ve got pictures, you’ve got descriptions and attributes and up seas and shipping waves and all that fun stuff, but you have to be able to publish and or match to the sales channel. That’s, that’s point one. They need to know how many you have, right. So that’s inventory myth. You need to know where that inventory sits and an hour World in the world of especially now distributed logistics, which can mean that your inventory might be in your warehouse, it might be at your suppliers warehouse, it might be in a three pls, you run where you only inventory but it’s somebody else’s shipping it for you, you may have inventoried all over the place, but you need to know where it is how much inventory you have, so that you can intelligently determine how you’re going to publish. So that’s the inventory aspect of this.
You need to be able to price and control prices and manage price parity across all of your different channels, especially if you’re a brand. You know, controlling and monitoring is really a critical thing to brand integrity. And then the fourth component is you got to be able to download orders. So downloading orders is simple and sort of that component of it is but then knowing what to do with the order across a distributed footprint of many, potentially many different locations and on many different fulfillment methods is a fairly complex thing. Particularly in this day and age where you’re trying to meet the demands of, you know, seller fulfilled prime on Amazon or any of these other guaranteed shipping programs across the other marketplaces, you know, consumers expect the product in two days or less. Now, that’s just the thing. So you have to know where that inventory is in the first place in order to be able to route the orders intelligently.
And then you have to be able to make sure it gets shipped on time and all that good stuff. So. So we’re also an order management system that uses or can leverage up to seven different fulfillment methods. And then we’ve got distributed order management on top of that, which is basically a fancy way of saying that the system will figure out every possible scenario of how that order could be fulfilled within the timelines required and the business rules required and routed to the most efficient place saving, you know, increasing margin after the sale. And then after that, you have to be able to publish tracking information, so you get the tracking back out to the originating sales channel. So it’s five basic touchpoints, but you know, even in just explaining the five basic touchpoints, you can hear that there’s just a tremendous amount of very able to deal with.
And we figured out that if you could normalize the five touchpoints and let the system and the platform deal with the eccentricities of the individual sales channels, and normalize the business operations to manage those five touchpoints, that becomes a foundation for scalability and automation.
Joris: So that’s the biggest problem your clients have when they come to you? Not being able to scale enough because they had the whole logistics behind it. That’s not really the following.
Where Are eCommerce Brands Struggling?
Michael: Yeah, that is a very, very common problem. You know, we run into scenarios where people have, you know, reach six or seven figures a month in online sales. And that can mean that there are a large reseller, which is kind of our legacy client base people in really large catalogs, selling a lot of products and a lot of places versus Now obviously, the shift of the last year and a half in two years has been that brands are going direct. And so brands are now just figuring out or running into some of the problems that resources have been facing for years.
But oftentimes, depending on the brand, they’re experiencing it that even more extreme scale, because brands generally have their inventory already in multiple locations, whereas a lot of resellers don’t have a tremendous number of locations unless they extend their supply chain. Right. So we’re seeing different types of organizations have different needs, but generally speaking, visibility to where that inventory sits, what it’s going to cost, to be able to get it to the end customer has to be the starting point in order to determine how you successfully publish across your different sales channels, and knowing what commitments you can meet and so forth.
And doing that at scale requires that you have a very integrated approach to looking at the digital commerce world. And whether it’s a brand or whether it’s a reseller really, anybody who has experienced a certain amount of success in this space generally does that by putting together a number of different systems and or sort of custom building their own systems. And many times we get brought in to sort of help them out of the corners that they’ve painted themselves into.
Joris: Yeah, yeah. So sales channels that you integrate with you already mentioned Amazon, eBay. What else do you integrate with?
Michael: I was looking the other day. And we’ve done hundreds of different sales channel integrations. But you know, they’re common ones, of course. So you have the major marketplaces, and we work with pretty much all the major marketplaces and a lot of the various countries that they sell within we’re a multi-currency platform, as well in terms of the pricing engine and dealing with all that. And then you know, the major shopping cart platforms that you run into, so everything from the big boys shopping carts to know, the shop provides and big commerce of the worlds and a lot of custom shopping carts.
And then more and more as we continue to work with more brands, especially the larger brands, they generally are doing a lot of what we started out calling just endless aisle drop shipping, we’re hearing terms like wholesale drop shipping basically the same thing. It’s where you’re partnering with a large retailer who’s got a solid online presence, they want to offer your products on their website. But they don’t want to carry the inventory.
So they just want to dropship them when they sell them. And so especially as we run into more brands and work with more brands, they’ve got a lot of those types of relationships. And so they’re more one-offs, and it’s a lot of EDI type of work. But if you take all of that into consideration, you know, we’ve done hundreds of implementations across a lot of different types of channels. And we know that that’s going to continue, right. So that’s why I think kind of normalizing down to those five touchpoints has been so critical for us because we don’t have to figure out how to do those things anymore. We just have to figure out how that channel wants to see it.
Joris: Yeah, right. That makes sense. Now, when people implement your solution, what’s the outcome? What are the results that they see after implementing and what’s the impact on their business there?
Michael: Well, we have a statistic that we run every single year that we’re fairly proud of. And that is that after implementing our system, within the first 12 months, our average client has grown by 108% more than doubled in size on their digital channels. And that is actually an eight-year average. That’s doing this for almost 10 years now. And that’s the statistic. And, you know, the obvious question that kind of comes out of that, that I get every single time is how, like, what?
Joris: Absolutely. That was going to be my next question.
Michael: And, you know, it’s interesting because we certainly have tools that help really increase listening counts and in helping you get a lot more strategic in your pricing strategies and policies and things like that. And those definitely can help increase an end drive top-line sales, but more times than not. What happens is that when you get those first channels up and running, so we call it a phase one implementation, when you get that foundation in place where the catalog is loaded, you’re connected to your sources of inventory. And now you just got to figure out how to start merchandising and leveraging that. What ends up happening is every channel that you add, becomes a lot less work.
So if you think about it this way, if you didn’t have a single source of truth to manage all those five touchpoints that I talked about, what ends up happening is you say, Okay, well, I want to add, let’s say Google, Google is a great example, because they’re setting up a brand new marketplace. They’re there. They’re pitching this concept of a universal shopping cart. They have more eyeballs on the top of funnel product searches than anybody else on the planet. And now all they’re doing is they’re trying to just increase the efficiency, reduce friction in the transaction, and actually provide the ability to check out with Google, which then will make them compete with Amazon’s bottom of the funnel right?
So, a great example, the new shopping cart, and people want to get on it. Well, if you were, if you didn’t have a single source of truth for those five touchpoints, you would end up trying to figure out how you deal with Google directly. Right? So you end up using their toolsets going through their interface, uploading their spreadsheets, and so on learning how they’re going to handle transactions, how do you handle customer service, all that stuff. As opposed to if you’ve got a single source of truth where your catalog is already loaded, and let’s say you’re already selling on Amazon, and Walmart, you’ve got rich content in place already.
Now, it’s just a matter of okay, we map in the Google connector and we map the content and we set up your pricing rules, we map your shipping policies. And we launch. so the point of that is coming back to the hundred and 8%. It’s, well, we do have the tools as I said to increase top-line and that could drive top-line and be helpful and driving the top-line. A lot of times it’s just that once the platforms in place, it becomes easier to do the things that you know you’ve always wanted to do, but just never had the time to do, right because the system is dealing with, you know, it’s an automation suite.
So it’s helping people to do things in a more automated way. It’s reducing the amount of labor that’s required to do a lot of different tasks. And so, therefore, people have more time. And most people when they come to us, they know what they want to do. They just don’t they’re so busy just trying to keep up with operations every single day, they just don’t have the ability to execute. And so once the foundations in place, getting on the new panels becomes a lot easier and implementing the strategies, getting more creative with merchandising, getting more aggressive in pricing strategy, all of that stuff becomes a lot easier to do, but you do it in one place and it manages all of your channels. You know, it’s that people are able to execute on the growth initiatives that they just weren’t able to do before is what I attribute a lot of that growth.
Joris: Yeah, that makes sense. How hard is it to set it up?
Michael: Well, it is a, as I mentioned, we’re not a mass-market tool, right? We are, we’re an enterprise-level platform. And, you know, 10 years into this, we’re still slightly less than 100 clients. And but these are our, out of the big boys of the multi-channel world. And so most of these are doing generally multiple, seven figures a month in sales across a couple of different channels.
So it’s not to be taken lightly. It’s definitely not something you sort of step up to and says, I’m going to self implement and try it free for 30 days and see if I like it. Yes, and you, we go through a very, very formal implementation process. And there’s a fundamental reason. So the fundamental reason is this. In order to be able to achieve scale, you have to leverage automation. And automation is nothing more than data-driven decisions. So if you don’t have a catalog that is set up correctly, where you’ve got a single master skew in the base unit, a measure that is mapped to all of your different listings across all of your digital demand channels.
And that could include a unit of measure conversions, like a three-pack or 12 pack, it could include, you know, a product that’s sold as a kid somewhere else, right? Or is assembled into another product, you’ve got to have integrity in that catalog. Because otherwise once automation kicks in, it’s just going to dig a deeper hole for you that much faster, right? If you have bad data, so, so we go through this formal implementation process to get our clients live, and it depends greatly on how many channels how many fulfillment methods, do they have integrated suppliers? Are we doing drop shipping for you know, a number of different factors?
But generally speaking, I would say it’s going to be two months on the short end, and, you know, five, sometimes six months on the on the higher end for some of the larger projects where there are lots and lots of different channels enter variables is it is a formal implementation process that you go through similar to what you might experience if you were in implementing an ERP or a WMS type of system.
Joris: Yeah, of course, I hadn’t really accepted expected to the plug and play. I mean, there are so many variables to it. So it only it’s only logical that it takes a while to get it all up and running. This type of bit about eCommerce in general, what kind of trends do you see in eCommerce these days?
Michael: Well, there’s a mentioned earlier you know, well our legacy client base is largely resellers and, you know, nine years ago that was who was primarily dominating the marketplace space, where these large resellers and what we are seeing is, is I don’t think going to be any news to anybody listening to this is just that brands are going direct. And you know, we started seeing heavy trends two and a half three years ago towards this. And resellers are starting to get a little bit nervous at that point in time. And I would say that has now transitioned to sort of an urgent situation for a lot of the resellers because they’re losing chunks of their catalogs to the brands as they as the brand’s transition to figuring out direct strategies. And so, so I would say that that’s the first component is that brands are going direct.
And yeah, it’s a trend that is going to continue. I think it is now generally accepted. By pretty much everybody, they kind of expect to see brands representing their own products, at least on their own website, if not on the marketplaces. And so, but that’s, that’s changing the market quite a bit. It’s changing things, especially for resellers. As it relates then to kind of the trends that we’re seeing with brands. I mentioned earlier, we’re steering away from the term just e-commerce because of the baggage it carries with it. What we’re seeing is that seeing and I guess kind of coaching our customers on is have to really look at how you’re going to hold Together digital commerce strategy and that’s going to encompass several different things.
You have to first of all if you’re a brand, you’ve got to deal with the concepts around channel conflict, how are you going to manage that? And that’s what we could do, you know, probably a couple of podcasts on just that topic alone. It’s a tricky one, right? But one of the more important other topics that brands need to really be thinking about is the concept of understanding how to leverage distributed logistics in order to meet consumer demands and focusing on how you meet the expectations of consumers is critically important. And said differently that largely comes down to this concept of you know how Amazon has kind of spoiled list if you think about it, as a consumer, we really, we like it. I mean, I’m a Prime member, right? I enjoy getting products in today’s life as a consumer. Also being in the business of helping organizations trying to meet that expectation and seller, fulfilled prime and so forth, it drives me nuts. Because to get a product to the end consumer in two days or less, it sounds really simple, right you can wrap an order in dollar bills and get it anywhere you want to.
But that doesn’t mean you’re profitable, which means it’s not sustainable. And so figuring out how you take advantage or or how you should look strategically at your fulfillment strategy, in terms of where you place your inventory in which products are towards the edges of your network versus maybe longtail items that are held in a centralized DC and coming up with the right balance and the right strategy from a fulfillment perspective is going to be an is I would argue one of the biggest factors in terms of how successful you’re going to be in the digital commerce world these days. And the reason for that is it’s all around the expectation or the consumer’s expectations really that Amazon has set and the Can everybody talks about the Amazon effect?
Well, this is one of them. Consumers now expect that they’re going to get their products in a couple of days or less. And it doesn’t matter if they go from Amazon to then going to your direct website, or going to Walmart or going to Google or eBay or whatever. They bring those expectations with them. Right. And, and it’s proven by their shopping patterns. So if you go to most of the major marketplaces, now, they’ve emulated what Amazon has done, which is they’ve got a little toggle on their site. And if you don’t want to see products that can’t get to you in some sort of an expedited fashion, they’ll call it different things. But basically two to three days. If you don’t want to see those products, you can just basically shut those out of your search. So the impact on that, you know, Amazon has touted that it’s a 52% lift in sales by having the prime badge versus not having a prime badge.
eBay and Walmart have also mentioned some statistics and conversations I’ve had, I don’t know if they published it or not, but generally speaking, You’re talking 30% plus lift in sales if you can get things there in a timely fashion because that’s how the consumer is shopping. And so if you’re going to be successful in this space now you have to think long and hard about what am I going to do from a fulfillment strategy standpoint, in order to be able to meet those expectations. And that might mean that you’ve got a warehouse that you own and then maybe you partner with a couple other three pls, that give you a distributed footprint. It might mean that you’re working with your suppliers and getting them to drop ship for them. It might mean that you want to open up a new location, or in the case of some of these large brands that we’ve been working with, maybe you want to take advantage of some of the master distributors you have in places like the Ingram’s or Cynics, or DMH’s of the world for example. And if you run out of inventory in your location, maybe you want to dropship it from them, even though you’ve sold it to them also wants already just drop-ship it from the margins are lower, but it gives you that today flip for footprint if you really need it. So there are all sorts of different ways to look at this based upon having the capabilities to deal with the variables and but I think that fulfillment strategy to meet consumer expectations is probably going to be one of the dominant drivers here over the next year or two.
Joris: Yeah, that’s really interesting. Do we tend to talk a lot about marketing and in this podcast, but yeah, I never looked at it that way. It is driven by demand, obviously, but the whole logistics behind it and making it happen, the whole fulfillment behind it. That’s, yeah, that’s actually a key area to compete on and make sure you make it happen and meet those expectations of the customer. One last question. What will be your number one piece of advice for people who want to grow their eCommerce?
Michael: It would depend I think a lot of the kind of who they are, right? So if you’re a reseller, you need to be figuring out what’s going to make you unique. It is, you know, over the years, you get to build personal relationships with a lot of heart clients, obviously over the last nine and a half years, and there are really large resellers out there, you know, seven figures, sometimes multiple, seven figures a month, that are, they might lose a single brand, and that drops their top line revenue by a couple hundred grand a month. And that’s not a single incident. It’s not an isolated incident, right?
Brands are going direct and you cannot ignore the trend. And so, so resellers need to figure out a way to add value to the mix. Other than just publishing online, they need to figure out ways to approach brands and actually turn around and get their brands the brands that they represent to be customers. So now that might be offered marketplace management as a service to those brands. It might mean negotiating exclusive agreements, could be any number of different things but it is going to continue to be really hard to grow a reseller based business unless you can figure out something very unique about your supply chain, you’ve got to have unique access to the product.
Otherwise, it’s going to be very, very tough to compete. But if you’re a brand, I think my recommendations would be very much along the lines of some things we talked about, you have to look long and hard at how you’re leveraging a distributed footprint to be able to meet consumer expectations, and the brands who can do that effectively, and be able to scale that are going to be the ones who really start to be dominant. Not everybody, not every brand has the luxury of being a destination brand. As you are fantastic. You know, you’ve got your own set of problems to deal with volume related, usually if you’re a destination brand, but there’s a lot of what we would call distribution brands as well. So if you’ve got you know, I don’t know if you’ve got a tool on the market, but there are 10 other people who private label that tool and are also selling it right next year listings, then it’s Going to be more about convenience. And you can do everything you can.
And you should definitely do everything you can’t differentiate your brand and build value into your brand. But if your brand is sort of on par in the market with another brand, and they’re sided by side, and your product is available in four or five days and the other ones available in two or three, guess which one the consumer is going to go with? Right? Yeah, you have to think very strategically about how you differentiate not just from a product and branding standpoint, but also from a logistics standpoint, to be able to drive top-line sales.
Joris: That’s a piece of great advice to end this interview with. Michael, this has been absolutely great. And we could probably go on for a very long time, but we’re running out of time and I just want to make sure that people know how they can find you learn more about you. What’s the best place for people to connect with you?
Michael: You know what, if you’re listening to this and want to reach out to me directly, I’m happy to chat with people. Just shoot me an email first, it’s just [email protected] com. Otherwise, if you’re just looking for information, just come to our website and engage with us there to etailsolutions.com. It’s E-T-A-I-L solutions.com. And there are certainly ways to engage with us through our website. And we can set up a time to chat. But we’re always happy to have conversations and take sort of a low-pressure type of an approach to just say, is there a place where we can add value and solve a problem and it’s so fantastic. If there’s not then maybe we know somebody in the industry that we do.
Joris: Okay, thank you so much for being here. My call has been great. Thanks.
Michael: Absolutely. Thank you much.