Frazer Kinsley chats to us on the best ways to scale logistics for a products-based brand, in an effort to help shed some light on how to approach these more complex parts of a product-based business.
One of the biggest concerns new entrepreneurs have is how to handle logistics for their new business. Shipping, warehousing, supply chain, forecasting… its a LOT to understand. This is therefore a must-read for really understanding the basics of logistics for your products business.
Tell us a bit about your background
I’m the Co-founder and Managing Partner of Kinsley Partners, a seed/early stage venture firm focused on CPG, and industry-adjacent investments and consulting.
My family has been involved in E-commerce since the early days, when my parents were some of the top resellers of Swatch watches in the world. This was during the “Swatch Watch craze” of the 1980s/90s. I had no intention of getting into e-comm/supply chain originally, though.
My dream was to be a Navy SEAL but I suffered a career-ending injury during that training that put me out of contention. I didn’t really have a plan after that, so I went to work in an entry-level ops job at a supply chain/procurement tech startup in New York City, USA, to get my foot back in the door.
During that time, I started Kinsley Partners with my brother, Jake. Kinsley Partners was a way to invest in early-stage consumer brands.
Fast-forward a few years and I started a 3PL called Hook Logistics with two other guys, which I exited last year.
I currently work in a few roles at a few different companies, but my overarching focus has been – and continues to be – in supply chain management within the consumer goods space. My scope ranges from SMB, all the way up to publicly-traded companies.
Talk to us about logistics… what are some key terms and ideas new product creators should know?
Let’s face it: you hear the words ‘logistics’ or ‘supply chain’ and you either get bored, pissed off, or both. I find that often when a brand’s supply chain and logistics aren’t in order, it’s due to a lack of knowledge that leads to inaction, more than anything. But, it doesn’t have to be that way!
When you’re first starting out, you’ll have input from 100+ directions on how to ship, warehouse, fulfill, distribute, replenish, etc. all of your products and product lines. My advice across the board is: keep it simple.
This will remain true as you grow, but is especially important in the early days. Other than that, constantly look to evaluate your supply chain. Like marketing, there are tons of cost levers that you can pull on at various points in your product journey to help manage costs.
As far as terminology goes, you could probably write an entire dictionary on all of them. It may sound silly, but for creators starting out, Google will always be your best friend. My recommendation for newer operators is to speak to as many non-vendors (or potential vendors) as possible. Whenever someone mentions a term you don’t know, write it down and Google what it means after the call. Sounds rudimentary, but you’ll be surprised how quickly you’ll pick things up.
There are also tons of blogs and guides out there that shed light on basic terminology and strategy for newer brands. You can find a free version on my Gumroad page if you’re looking for a place to start.
Get the comprehensive Kinsley Partners Supply Chain Playbook for every new DTC, CPG, and apparel brand… tested, implemented, retested, and refined.
What do you look for when evaluating a 3PL partner for a scaling brand?
There are myriad factors that go into evaluating a 3PL on the brand side, but there are some foundational questions that every brand should be asking themselves and prospective service providers:
- What type of product are you selling? Some 3PLs are better suited for low cost, high volume. Others the opposite. Totally depends on that 3PL’s expertise.
- Do you have any special needs (temp/climate control, specific storage method, perishable)? Not everyone can offer what you need for your product. Just because a founder-friend who owns a cosmetics line recommended a 3PL, doesn’t mean it will be a good fit for your food+bev brand.
- How big are your products? That’s great that the folks at Burrow recommended their 3PL, but if you’re selling headphones, that might not be the 3PL for you. Moreover, if you’re selling couches, some 3PLs don’t want the space taken up.
- Do you require kitting? Subscription/sub box management? If you have multi-step kitting or boxing requirements, some 3PLs are better suited for that high touch service than a strict volume player.
- What’s your [projected] throughput? Let’s face it: the less volume you do, the less options you have. The deal they gave the $50M company probably won’t be extended to the pre-launch brand. Some 3PLs also have higher monthly minimums that won’t work for emerging/nascent brands.
- What channels are you selling through? Do you require EDI compliance? FBA prep? FOB into distribution? Not every 3PL serves the same markets. Some focus strictly on e-commerce while others focus on distribution, FBA, and FOB, while others can handle omnichannel.
Ultimately, your 3PL is not just your service provider, they’re your closest business partner. Their success is largely dependent on yours, so they have skin in the game, too. Aligning incentives as both a provider and as a customer can ensure a long-term and effective partnership.
How has the logistics behind scaling warehousing and delivery changed over the last few years?
The industry seemingly changes everyday, but some of the biggest changes that I’ve seen recently is the modernization of the 3PL fulfillment model.
Historically, warehousing and fulfillment has been a black hole where brands are pretty much forced to choose the “best, worst option” of a few conglomerates and send their goods to a random warehouse that they can’t even get an email response from.
In the past few years however, there’s been a democratization of sorts in the industry with a rise in boutique, local, regional, and specialty 3PLs. While certain industry names tend to dominate the conversation, there are way more and way better options these days, especially for emerging brands.
Simply put, the scale and service that were previously reserved for larger brands, are now more accessible to emerging brands.
Any essential software or subscriptions you recommend to entrepreneurs in this space?
This is where I differ from most, but it’s really going to depend on your situation. I see a lot of “must-have tech stacks for $X million brands”, but I’ve worked with $50M brands that run their ops on a Google Sheet.
Is it scalable? Most times, no.
However, I think your tech stack should ultimately fit what you need and provide a foundation for scale. That being said, I believe every brand needs:
- Some sort of accounting software (I like Quickbooks the best).
- A way to track inventory. Some do this in Quickbooks, some in a spreadsheet, some in a bonafide ERP or IMS [Inventory Management System] in which case I’d go with Skubana.
- A way to track orders. If you’re going single channel to start, you’ll be fine with managing this in your Shopify or Amazon account. As you scale up and/or add channels though, a proper OMS [Order Management System] becomes more necessary. In that case, there’s no alternative to PrettyDamnQuick in my opinion. I’m an advisor there, but hold firm that it blows other OMS’ like ShipStation out of the water.
- A way to manage customer service. Of the four areas on this list, this is the area I would never skimp on, whereas the others are all technically replaceable. Make sure you’re using a system that works specifically for ecom. If your systems don’t “talk” to each other, they just become clunky and useless. Kustomer and Gorgias are the two options I’d recommend here.
Any thoughts on DTC vs retail vs Amazon for new brands?
There’s a lot of noise on this topic, but I go back to, “What works best for you will ultimately be your best path”. DTC is great for increased margin control and customer interactions/insights. Retail is great for product exposure and cheaper customer acquisition. Amazon provides a turnkey solution and a marketplace setting with millions of MAUs.
IMO, 95% of roads lead to omnichannel, so there’s a good chance that most brands end up selling through all three of these channels eventually, anyway.
On a fundamental level, the question I ask is “Where can I best meet my customers where they’re at?” Customers may be looking for less expensive commodity items on Amazon, their favorite influencer’s makeup on their Shopify store, and their favorite regional cheese at their local Erewhon.
It’s about meeting your customers where they’re at, however that ends up looking for you.
What should new brands consider or make sure they learn about as they go into retail?
I think the biggest one is by far the financial implications. Retail is a great flywheel, but there are some hefty startup and maintenance costs that can be barriers for entry. Having an airtight command of your cashflow, unit economics, gross margin, etc. are absolute non-negotiables. Without an idea of your financials, you’re jonesing for a world of hurt.
Net 30/60/90 day terms are not uncommon in retail, and while you may be ripping the cover off the ball in stores, that cashflow conversion rate can be a killer. Additionally, a lot of folks bemoan the margin creep that can happen in retail.
The fact of the matter is, a lot of those silent killers can be mitigated by an understanding of your cost to serve and target/actual gross margin.
Beware of “retailer/distributor mandated” processes as well. For instance, I have near-daily conversations with founders that didn’t realize they could switch their UNFI/KeHe freight off of FOB and save 10-20% on transportation costs.
If you don’t ask, you don’t get. If the deal isn’t what you want it to be, ask for a concession. Never hurts to try.
Any tips or tricks for long term success in the space based on your experience?
Be you and put the blinders on. Our industry is like any other one: infinite streams of information, drama, this vs. that, “who’s who” – it’s all bullsh*t. Define what success means for your business and have a single-track focus each day to do things that get you closer to success.
The next biggest thing is to value [real] relationships in this industry. I’m convinced we have some of the smartest, most talented, and most generous people in the world in this industry. You either contribute to that sentiment, or detract from it. Here, the winners are always the ones that do right by their vendors and their colleagues; full stop.
What innovations or technology would you like to see come to DTC business operations?
I think we’re already starting to see it, but I love how forward-thinking the marketing community in DTC has been with dashboards and data aggregation. I always joke that DTC is a data scientist’s paradise with all the inputs and outputs, so it’s great to see that portion of the industry hit the mainstream.
I’d been working on a pet project with some others in the industry a few months back, but a Triplewhale/Northbeam style ops control tower is something we had in mind, and would be a great addition, IMO. We used to offer this in the form of PowerBI/Metabase dashboards to some of our customers, but a more robust and interactive layer would be great for operators, especially in the early stages.
What are you working on next?
Aside from my core work, my side project for the past year or so has been on a concept called ‘Linkt’. The idea spawned out of the early days of sourcing and distributing PPE during COVID for smaller hospitals and healthcare clinics that didn’t have access to the emergency stockpiles that larger institutions did.
Since then, we’ve sort of discreetly worked on projects ranging from establishing oxygen concentrator and respirator supply chains in rural India for the government’s Delta variant response, to our most recent project where we set up the first wholly civilian supply line directly into Ukraine and raised $1.5M in donations for displaced citizens.
The goal with Linkt in 2023 is to formalize this disaster relief and austere supply chain planning into a bonafide foundation.