Managing supply chain sub $10M revenue is a real challenge for most DTC.
Unlocking the pain points is a major turning point.
The issue:
- not enough revenue to hire for all the competencies (sourcing, inventory planning, logistics, tech pack)
- owner is often doing a
You're not Amazon. Stop offering free shipping.
This is checkout from an e-commerce brand doing over $3B.
Scrutinize your unit economics. Every dollar matters.
Lately, there's been some buzz about "Profit First” by Mike Michalowicz since Andrew Wilkinson’s appearance on the My First Million podcast.
I read it a few months back when Andrew recommended it to his X subscribers.
Simple and effective which is good for me.
Here’s what it's
I have been deeply influenced by
@TaylorHoliday
and his contribution margin drumbeat for a year now.
Revenue has been ~10%, but I've engineered significantly more contribution margin by doing the following:
@ncsh
@duolingo
Duolingo is a good business, but not good for actually learning a language.
Breaks a core principle of how the mind learns a language by using translation.
Millions just having fun but wasting time.
@austin_rief
@MorningBrew
Def poor way to say it, but:
The heart of his issue is protecting journalism and free speech.
Does
@MorningBrew
influence their editorial based on advertiser input? How hard do you fight on behalf of free speech?
My favorite business book:
Shoe Dog by Phil Knight.
Here’s why:
• ZERO KNOWLEDGE
Knight's journey with Nike began with zero manufacturing knowledge.
He proved that sometimes, the will to succeed trumps technical know-how.
• SIDE HUSTLE
For the first five years, Nike
@c_gro
Not quite.
$20M Total sales (includes shipping is $15/order)
minus shipping of $4.4M, gives you
$15.3M Net sales
minus COGS (let's say 30%) of 4.59M
minus processing fees (0.4%) of $1M
minus advertising of $7M
contribution margin is: $2.71M
Still worth it - ESPECIALLY
“You wanna know the truth? I can’t sleep at night because I’m thinking about how I’m going to spend this million dollars”
This is a quote from me just a few hours before I was blindsided and voted off the island on Survivor: Palau on Day 33.
My private hubris created
Was asked today if we are past the "glory days" of DTC.
I was asked today if we were past the "glory days" of DTC.
Past? They haven't started yet.
The glory days will be defined by widespread operational excellence delivering reliable profits via loved products.
While
An important reminder for founders, from Van Halen:
Small details can reveal (and prevent) big problems.
Take the Brown M&M’s Principle.
The rock band Van Halen used to have a “brown M&M’s clause” in their contracts, stipulating that event organizers provide M&M’s backstage,
Too often, I see e-commerce owners doing sub $10M managing their supply chain solo.
Talk about overwhelming.
Sourcing, inventory planning, logistics, tech pack design, oh my!
You can and should build this team overseas.
It will pay for itself, help you get out of the details
E-comm friends: this will sound familiar to you.
You have a ton of inventory on the balance sheet and need the cash because sales are low and Nov/Dec expenses are due.
You are forced to offer major discounts, hammering your profitability on P&L.
You now have cash to survive,
Your most important partner in e-commerce:
Your third-party logistics (3PL).
Logistics is incredibly hard.
A great 3PL can elevate your brand with consistent and reliable shipping.
But a poor one can be catastrophic.
Watch out for these red flags:
🚩Inexperience: Your 3PL
You can save 10-15% on shipping expenses with a quarterly audit of your 3PL.
Disclaimer: Logistics is incredibly hard.
Finding errors with your 3PL does not mean anything suspicious is going on.
It’s hard, and human make mistakes.
A good partner will have no issue with this
As a Direct-to-Consumer (DTC) owner, I know what it means to juggle roles.
You’ve had your hands on every link along the supply chain, from sourcing materials to shipping finished products.
Knowing when to delegate those roles is crucial to the growth of your business.
But how
In college, on occasion, I would find myself, umm, “mesmerized” by Bob Ross.
I’d watch without any intention to actually paint.
Never got any supplies together or even picked up a brush.
Still, like many others, I only watched and was captivated.
And, by the end, I was in awe
If you’re in DTC and experiencing flat growth, licensing may be an opportunity to reach new audiences.
The artwork of some of the most popular music, sports and movies can breathe new life into your acquisition strategy.
Here’s a primer on what you need to know:
We all know
The 13-week cash flow is critical in e-com.
But,
the 12-month is just as important to navigate your inventory forecast.
So, you must connect 13-week to 12-month & have a feel for any ripple effects beyond 13-weeks.
13-week alone doesn’t get the job done.
A troubling trend I’ve seen in remote work:
Employees working multiple jobs.
According to Human Resources Director, 79% of remote employees have worked multiple jobs over the past year.
36% have at least 2 full-time jobs.
This isn't just about multitasking.
It's a question
I just finished listening to the Lex Fridman Podcast with Jeff Bezos.
Here’s what resonated with me most:
• 𝗧𝘄𝗼 𝗗𝗼𝗼𝗿 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻𝘀
Two door decisions are decisions that are reversible.
Make these swiftly, as you can always course correct.
One door decisions -
Onboarding is more than an initial orientation for new employees.
It's a blueprint for long-term success.
The first week at a new company can be disorienting or empowering.
Your onboarding process determines which way things go.
Here are the critical points that your
@TaylorHoliday
- Switching 3PL to Mexico for Section 321
- Negotiated with all variable expense partners
- Push product team to get further head of schedule
- Implemented
@getfondue
- Optimized the hell out of email flows
Licensing isn’t just for the Disney's of the world.
It's a smart play for any brand aiming to expand its reach.
Let’s look at how brands parlay their IP into bigger business.
Consider these examples:
1. Marvel
Marvel didn’t just create superheroes.
They mastered the art
As an ecomm owner, I was struggling to get a real time snapshot of the business on my iPhone. Shopify, GoogleAds, FB ads, cogs…was toggling to piece it together. Until I found
@trytriplewhale
. Best product hands down that solves this problem. Great analysis tools included!
If manufacturing were closer to your warehouse, you could:
- keep less inventory on hand
- tight coupling of POs with sales
- collapse your cash conversion cycle
- eliminate freight costs
@brianbeers
Explain that your role is to treat people fairly. Giving him an extra paid week requires you to give everyone an extra paid week - that's fair, but...
Since the business cannot do that, you give him the option: one week of unpaid vacation or he can quit.
@STLChrisH
Depends on the role and stage of company for me.
A has accelerating potential and usually my preference, but there have been times when I need immediate experience to address a competency gap that is becoming costly.
@chrisxmunn
Lawyers aren't good at placing business value on a decision or strategy.
I would certainly try to scare the seller.
I would even go as far to inform the customers (over phone) that seller is breaking contract & they may have to get involved in the conflict if they engage.
A job description doesn’t deliver results.
Yet, it remains the core agreement between most hires and their employers.
So, how can you proactively manage expectations and outcomes, before an employee starts?
The answers can be found in Reid Hoffman’s concept of the “Tour of
Outsourcing is not just a cost-cutting move.
It's the secret to tapping the planet’s best on a budget.
Let’s talk about it.
𝗧𝗵𝗲 𝗚𝗹𝗼𝗯𝗮𝗹 𝗧𝗮𝗹𝗲𝗻𝘁 𝗟𝗮𝗻𝗱𝘀𝗰𝗮𝗽𝗲: 𝗔 𝗠𝗶𝗻𝗱𝘀𝗲𝘁 𝗦𝗵𝗶𝗳𝘁
The game has changed.
Talent was once thought to be clustered in
Early stage e-commerce companies can quickly choke their progress with poor supply chain management.
It’s so common.
A client of our went through this common evolution of their supply chain which may resonate.
First, the owners were managing all aspects od the supply chain.
Each episode of Survivor is 44 minutes.
Remove challenges and tribal council and there is about 20 minutes left of story telling remaining.
These 20 minutes cover 3 days (4,320 minutes), or 0.05% of what happened.
What you see really happened.
But the editing process
As a business owner, I’m constantly trying to simplify things.
A clear mission and vision is a critical north star, but can I get more tangible for my team?
I’ll often ask: is there one question that can automate consistent decisions in my businesses?
For Southwest Airlines,
I’m partnering with a friend of mine, who is one of the more talented creative directors-turned-entrepreneurs I know.
We are running an experiment to test a hypothesis we have:
That some of the most creative people are locked in an agency, giving their mindshare to the best
The first dollar is the hardest dollar.
So much has to happen for it to hit your account.
But, the learnings from making your first dollar are worth a million.
You’ve already done a big part of the heavy lifting and finally have some wind behind you.
Assuming your product or
Fully agree w
@SeanEcom
Remote work wins every time. No question - better for business.
- better talent pool
- less distraction > more deep work
- lower cost for talent
- no rent
- better positioned for AI
Of course, need a great team & need to know what you’re doing.
Slack can be a powerful tool for any remote team and business owner.
But, if left untethered, it easily becomes a confusing mess distracting everyone from the real and important work.
Here’s what I do to make it a source of information and order that feeds my daily thinking
Ecomm friends - There could be up to 10pts saving in gross margin by tackling these:
1. Use Section 321 to bypass duties and tariffs from China
2. Source alternate vendors to negotiate with current vendors
3. Bump prices by a couple bucks
4. Increase shipping cost to customer
@Gesso_Singh
You got any data that supports this. I think customers are starting to come around and indifferent - assuming you have something they want and not a cheap imitation.
@AmandaMGoetz
I've always thought it to be because time is relative.
A week to a newborn is its entire life.
A week to a 1 year old is 1/52 of their life.
A week to a 10 year old is 1/520 of their life.
And so on...
The experience of time accelerates.
My recruiting company
@hirewithmore
is relentless when it comes to employee retention.
We do everything in our power to ensure we’ve placed a new teammate that is committed for the long term.
This is how we support that:
𝗥𝗶𝗴𝗼𝗿𝗼𝘂𝘀 𝗶𝗻𝘁𝗲𝗿𝘃𝗶𝗲𝘄 𝗮𝗻𝗱
Ways Amazon attacks your margin even if you're not selling on Amazon
- Sets customer expectation for free shipping
- Sets customer expectation for free returns
- Sets customer expectation for fast shipping
- Leverages volume for price expectation
DO NOT follow these.
Genuinely convinced the best way to build teams is to:
1) Overpay on U.S. talent to find the All-Star you need.
2) Support them with as many overseas employees as you can
You'll have more output and a lower payroll.
The ironic thing about the saas pricing convo is that the strong operators who are going to survive will negotiate you down or leave.
You will be left with the poor operators that won’t last long.
@MatznerJon
The challenge with influencer led service businesses is ease of filling the top of the funnels softens the operations.
You need to adjust so quickly that the client suffers bc people based service businesses do not scale quickly.
Something breaks. Client suffers.
@c_gro
Michelin is interesting because the guidebook was supposed to get people used to the idea of road trips and using your car to go dining. Brilliant. So, a tweak to the model is what company started another company to drive its original business.
@austin_rief
Big fan of Zuck and Meta, however, the impact on our youngest and most vulnerable takes him out of the running.
Musk is doing more for humanity: environment, free speech, connectivity and transportation.
Virtual assistants are usually the gateway to the Philippines. While an easy decision, not the right one. Instead hire a director/manager to establish expertise & build a team / competency from there. You can have full team for price of 1 US person. W/o comprising talent either.
I asked my most successful friend what his secret was.
He said:
"I just do what I say I'm going to do"
Don't overcomplicate it.
Integrity with yourself and others is all you need.
E-commerce owners STOP doing these:
- WeChatting w/ vendors in China at all hours.
- Managing inventory w/ apps hoping to get it right
- Extending production timelines due to poor specs
- Managing freight, customs & receiving
These are jobs for experts. Bring them in.
Very grateful to work alongside Lara in building and our partnership with
@andrewjfaris
who I have admired for his wisdom, vulnerability and genuine desire to see others do well.
Cheers to Lara and Andrew!
Honestly just the best to get to have a drink with Lara, the CEO of the Filipino staffing agency (More Staffing) that's been my main podcast sponsor for awhile.
Lara and her team are awesome and are in town from the Philippines. What a cool world we live in.
My first foray into entrepreneurship was when I was 12.
I dropped flyers in every mailbox in the neighborhood for lawn mowing.
Nobody called me. I cried and never did it again.
This is the holy order.
1. Find product market fit.
2. Stabilize company to prepare for growth.
3. Invest in profitable growth.
Go from 1 to 3 and there will be consequences.
This is the lesson of the tortoise and the hare.
How I accelerated growth by removing myself ASAP and leaning on a global talent
Has your e-commerce revenue flatlined?
It may be because YOU are the bottleneck in your business.
As your company grows, it requires more resources, predominantly people.
Owners transition from
@TaylorHoliday
@GetFondue
I'm run my e-commerce companies with extreme focus on contribution margin, give me a follow if you want to follow my journey
@greggcarey
.
There are many ways to play the offshore game.
Let me break down two of them:
A virtual ASSISTANT versus a virtual PROFESSIONAL.
A virtual ASSISTANT is good when:
- you have tasks that you'd like to offload
- you have SOPs in place to properly integrate them into your system
A first-time parent and first-time business owner is very similar.
As soon as you get comfortable with a particular stage, your newly developed skill becomes outdated.
The child and the company have grown and you need to again as well.
There's only one app that can make you a better husband, father, friend, and business owner.
A better anything and that is:
Opal
Lock yourself out and get in the deep work and connection.
Yesterday,
@TaylorHoliday
and
@RichardGaffin
spoke about "5 Questions to Ask When You're Hiring an Agency" in the Ecommerce Playbook podcast.
At the beginning, they elaborate on how rapid agency growth can impact the service quality.
The risk being that an organization with
I started using Opal in 2024.
Great app for blocking access.
A real block - like no work around to get back in.
My phone screen time is down 70%.
Highly recommend.
What gives me courage?
Knowing that my kids will love me regardless of how successful or unsuccessful my businesses are.
Losing "everything" is actually losing nothing when you have family.
Ask
@huntercdurham
. He gets it.
PSA: update your 13-week cash flow diligently over the new few weeks.
You'll feel safe from the influx in cash, but you cannot be surprised when fulfillment, ad spend etc comes due in Jan / Feb.
Small misses in sales can have huge impact.
The unprepared will break.