[EP 16] Modern Merchant Podcast: Rick Watson w/ RMW Commerce Consulting

Below, you will find a transcript of the episode.

Austin Rose:

Hey, everyone. Thanks for tuning in to The Modern Merchant podcast. My name’s Austin. I’m your host. I’m the Go-to-Market Director here at Flxpoint. With me as always, I have Travis Mariea. He’s the CEO of Flxpoint. In today’s episode, we have a very special guest. We have Rick Watson. He is CEO and founder of RMW Commerce Consulting and probably a million other things you see on LinkedIn and all the other spots that he’s out there doing earnings calls and a lot of great insight. We’re really excited about this from an ecommerce perspective and I’ve been super pumped to get you on here, Rick. Thanks for jumping on.

Rick Watson:

No, thanks a lot, Austin and Travis. I appreciate you guys asking me on.

Austin Rose:

Yeah. Absolutely. So just to get started, I mean, a lot of people, if they’re in this space, they’ve heard of your name, they’ve seen a lot of your posts and a lot of the insight and content that you’ve put out there, but just give us a quick little update on what you’re doing right now, whether it’s with the consulting agency that you started and anything other than that.

Rick Watson:

Yeah. So I’m CEO and founder of a boutique ecommerce consulting firm in New York City called RMW Commerce. With that, I work mostly with brands. A lot of them are venture-backed or private equity-backed and they’re looking to make some kind of transformation and accelerate their ecommerce sales. So many of them have been doing business for a long time and they don’t have the internal talent or the vision to take the next steps to accelerate their business. So hiring, given what it is, it’s hard to find digital talent everywhere and so people are more open to having someone from the outside come in and take a look at things that are happening. It’s just the next step. So that’s the business side, which has been a lot of fun and it’s accelerated through COVID, which has been great.

Rick Watson:

I also, just in the last month, started a new podcast called The Watson Weekly which takes my LinkedIn quick analysis idea and puts it into a weekly podcast format. So that’s been fun getting started as well.

Austin Rose:

Yeah, no, that sounds awesome. We’re going to tune into a couple more of those podcast episodes. Really, to get us started, because what I did is I saw where you started in your career. It looks like your background started in software development, right? To get started. So take us back to that and how did that get started for you? Were you always interested in that development software engineering type of role and when did it start shifting into the ecommerce realm?

Rick Watson:

Yeah. I mean, look, I love technology and computers growing up. I got an Apple Iie back in ’84. That was my start in development. In school, I finished my Master’s in electrical engineering and computer science. Ecommerce wasn’t a thing really at all back then. But a lot of the first generation web companies were starting to come up even pre-Google. So I joined a startup software company in North Carolina called Stingray Software and a number of folks there. Within a year of me starting, the founder… So the founder of that company was a gentleman by the name of Scot Wingo, who you may know, and ended up eventually being the founder of ChannelAdvisor. So he basically took five or six people from that original company and founded AuctionRover at the time. So that’s how I found my way into ecommerce.

Rick Watson:

The people that founded AuctionRover were some of the smartest people I knew in the company and I went a couple months after it was founded, went and knocked on the door. It was like, “Hey, can I help and join you guys?” So I was one of the first 10 employees. Something like that.

Austin Rose:

Nice. Yeah.

Travis Mariea:

Awesome. Auction-

Austin Rose:

Go ahead, Travis.

Travis Mariea:

Yeah, AuctionRover, did that evolve into ChannelAdvisor or was there… Yeah, right? Because if Scot was running AuctionRover, he probably… So it almost was rebranded, if that? Or what went through his head-

Rick Watson:

Yeah. So the trajectory was… It’s such a crazy time because AuctionRover was founded essentially in July, August of ’99. I joined in December. The company had zero revenue, but was bought for $100 million by GoTo.com in April of 2000. If you remember anything about that time, it was like three weeks before the dot-com crash. So that tells you a little bit about Scot’s business sense and timing, which has always been brilliant.

Rick Watson:

So while we were a part of GoTo.com, which was a public company… Basically, GoTo, if you know anything about their history, they invented essentially paid search. So just the idea that people will buy ads on search engines, GoTo.com came up with that whole concept that then Google stole from them basically and crushed everyone. So while we were part of GoTo.com, we started developing seller tools. So AuctionRover was originally basically an auction search engine aggregator. So a buyer would come here to search one place to search dozens of different auction sites. There wasn’t just eBay at the time. We started building tools for sellers like power sellers on eBay that were selling out of their garage and their basement.

Rick Watson:

As we were doing that, there was one month where Sun Microsystems signed up for our free tool and within a month had sold $50,000 worth of servers. This was at the end of 2000. So that was really Scot’s light bulb moment for like, holy cow, there is something here and big businesses are going to make a lot of money selling things on marketplaces. This is before Amazon even came on the scene in marketplaces at all. So I think that was the light bulb moment, when he bought the company back from the people that acquired him in 2001.

Rick Watson:

At that time, he rebranded the company as… essentially reformed the company as ChannelAdvisor, taking it back private for a fraction of what he sold it for, of course, and then… Because they were looking to get rid of the asset because they were a search engine. We were essentially at that time becoming a software company. He’s like, “Oh, I have this little idea I want to explore. Let me buy it back from you.” So he bought it back and then the same people, I mean, the same building, the same people, it was just a new name.

Travis Mariea:

Wow. We’ve seen that a couple times. Like AmeriCommerce did with Capital One. Similar. I don’t know how much it was one to one. They went on to be acquired by CARD.com and things like that. So it’s always interesting to see that. That period of time, that dot-com bust, I’ve heard so many stories about that. It must have been a wild time and it sounds like it was with so much money being made and lost all within a five year period. Our executive chairman was part of the ecommerce business around that time [Infopia 00:07:15]. I don’t know if you ever came across those guys?

Rick Watson:

Infopia, we were definitely… I remember the company. They were based in Utah and I knew some of the folks that were there at the time.

Travis Mariea:

Yeah, he was a developer for them. It was one of his first jobs and got him interested in what we do now, obviously the ecommerce side. But it was interesting to see… ChannelAdvisor, obviously one of those first… the first company to really just take ecommerce software to the next level. It looks like you’ve been there… You were there for quite a while in the software world. Over the nine years you were there, just would love to know from startup ChannelAdvisor to when you left, just curious if you could take us through a memory lane jog of just how it changed and the interesting inflection points throughout your career there.

Rick Watson:

Yeah. I mean, I think early on, we were mostly about small sellers. It was basically just taking the idea that you should… If you’re selling 30 items a month, how do we get you selling 1,000 items a month, is really that inflection point where it’s a little bit more than a hobby, but not yet a full-time business. How can we help people scale that business for people who have access to supply?

Rick Watson:

So we had a couple of inflection points. We had a product called ChannelAdvisor Pro, which was at the time we said it was free forever because no one cared about making money. So a big inflection point was to start charging for ChannelAdvisor Pro, which we developed their own billing system in-house, which was a huge project for us not only in the engineering side of it, but also the community management side of it. So I can’t remember how many sellers we had at the time, but probably at least 1,000 sellers that were on the platform.

Rick Watson:

Just the idea that something you literally hit… sellers literally had on record that this is going to be free forever and now you’re going to come back to them and say it’s going to be 30 bucks a month or whatever it is. I mean, the reality is 90-plus, which is a good business lesson. 95% of those people ended up staying on because they found value in what they were doing and the software was very professional and there were no bugs and it worked. You know what I mean? So as long as you have that… So that was, I think, the first big inflection point that we had in those years.

Travis Mariea:

Very cool. Yeah. It’s always fun to watch that drop ship growth and be testing constantly in a startup like that. Yeah, I mean, ChannelAdvisor is still very prominent today. A public company. We’re seeing this new breed of software come through. SaaS solutions in the cart world, right? Shopify obviously, the big boy. You’re seeing these new companies like VTEX competing against the Shopify Plus side. CARD.com just raised a ton of money going after… almost like a little bit of a different approach, bringing everything into one centralized platform and differentiating from the traditional Shopify and big commerce model of the App Store type of approach. You need to add more things to really get all the functionality. At least, for the enterprise type customer. At least that top-tier mid-market at least. Curious on how you think about that, right? There’s a lot of value in doing something really well simply and then let your developers fully [inaudible 00:10:44] around that. There’s also value in the all-in-one because it works better and you don’t have to worry about 16 different billing companies.

Travis Mariea:

So I’m curious what you think about… Is that a strong differentiator you see has legs? And just those two models in general, how do you see they might play out in the future?

Rick Watson:

Yeah, it’s always the push and pull. I mean, if you look at any market anywhere, from cable to cell phones to whatever, there’s always either integration or dispersion where things get… bundling and unbundling is another way to refer to it with Netflix. Now everything is getting back into bundles again after being unbundled for a time. So software is kind of the same way and it depends on what cycle you’re in. I would say in general, the web browser has really just become the platform for everyone. So to switch from one thing to another has become super simple. The big challenge has been the integration of all these data sources into one thing if you’re a small and medium business.

Rick Watson:

I would say in general, the smaller the merchant, the more likely they are to want everything in one place because it’s simpler for them to understand, being a new business. They don’t want to have 10 different dashboards or 10 different remote controls. They just want one remote control because they’re just trying to prove that the business works and it’s not maybe a full-time thing. Bigger companies tend to be okay with having multiple providers as a rule, but again, you get different corporate philosophies too.

Rick Watson:

So what I would say is especially with something that’s evolving as quickly as ecommerce, I tend to lean toward the best in breed side than the all-in-one side because really, really hard for someone to be an expert in one thing and for any one company to be an expert in 10 things tends to be super complicated and to keep up with the… not only just to have the function, because there’s one thing, having the function, you can check a box, yes, we have that, but the idea that you can do it really well and best in class becomes much more difficult.

Travis Mariea:

Yeah. No, for sure. Always interesting. You’re right, it’s definitely that push and pull and the bundling and unbundling. I think we were talking with Jay at Bold about something similar because it’s just a topic that’s super interesting to me because it’s never ending. It’s a spectrum that’s never ending. So I always love to talk to knowledge leaders about where we’re at in that spectrum and really what’s a differentiator, right? So Shopify’s been at the top. Everyone looks at them as, like you said, best in breed. Big commerce is climbing, coming after them, right? There’s another company, VTEX, so they’re kind of new on the block. Maybe it’s not the all-in-one verse app, but differentiating. Shopify’s, for me and a lot of people in the space, it’s like that, of course, just go Shopify. Right? Big commerce is kind of pushing towards the B2B side. Maybe they’re differentiating there. What kind of strategies, whether it’s in the cart world or just ecommerce in general, what do you think the differentiation is going to be here in the future and how people are going to be thinking about getting away from the top dogs today?

Rick Watson:

Yeah. I think the differentiator for a lot of these people is how much flexibility they need. To the extent that, okay, the front end is fine. I have a CMS on the front end, whether it’s Shopify, CMS, or someone else’s content management system. The cart is mostly the same, but maybe there’s some customized building you need or maybe you need payment methods that your provider doesn’t offer. So usually it has to do with the amount of flexibility you need and how many levers and things you need to switch out in your platform. So if you are the primary use case of Shopify, then it’s very hard to get in the room if you’re in an RFP or anything else with any other platform because you’re in their primary use case.

Rick Watson:

So I think the needs of your buyers, to the extent that your buyer isn’t just trying to look for a one-click checkout, and that is just not in the realm, particularly B2B complex scenarios where there might be regulatory requirements and extra verifications and payment and invoicing requirements, Shopify was never designed for that kind of thing. So I think checkout is definitely one of the biggest pivot points that I see in the ecommerce space, whether it’s in the consumer side or in the business customer side. So that’s one.

Rick Watson:

I think second is B2B wholesale retail locations, like if you have 50 retail stores. Most people aren’t thinking about Shopify day one. They might be thinking about Square and then they might be finding an independent ecom platform. So people come from different perspectives. I mean, I was talking to a Shopify sales rep the other day and even those guys were like, “Yeah, if someone has over 20 stores, we don’t even bring up our POS. It’s not even in the radar.” So I think they even have some… If you are primarily a wholesale business, Shopify may not be the right fit for you.

Rick Watson:

So I think B2B and wholesale is another pivot point that I typically see from people that goes more in the direction of Square, that’s more just a POS first company. It was founded as the first card reader of the iPhone and then it developed other things, particularly payments and things like that.

Travis Mariea:

So it’s physical versus digital first almost, right? Like you start with [crosstalk 00:16:42]-

Rick Watson:

Yeah. It’s just kind of funny because Square is also very digitally oriented, but physical too. You know what I mean? The more interaction, right?

Travis Mariea:

Yeah, but you’re right, I definitely think if I’ve got 50 stores and I’m trying to just be more digitally enabled, if you will, I’m going to go with my POS first type brand first, someone that’s more like the online store brand when I care about that secondary, right?

Rick Watson:

Right.

Travis Mariea:

Yeah, it’s interesting. Shifting gears a little bit from software, but you were touching on it a little bit and you talked about it consistently through your podcast and LinkedIn and things like that, but the shift in retail. This is one that I’ve always just toyed around in my mind and I’m just curious on your thoughts on there’s been this rise in direct to consumer where prior to direct to consumer and the enablement of social media and platforms like Shopify, you want to get your new brand or your new product that you’ve created, your line of products, you sold it to department stores or you sold it to brick and mortars and they sold it, right? It’s now direct to consumer. It’s kind of broken up the supply chain. Little bit distributors have been broken down as well with the rise of 3PLs.

Travis Mariea:

So the question, I guess, is the middle man approach of selling through to a retailer, they’re still… that’s a viable channel, right? But how do you see direct to consumer? Do you see it threatening that traditional resell approach at all a little bit or is it that there will always be a middle man and it just needs to shake out and find its way?

Rick Watson:

Yeah. Look, there’s always going to be retail as long, I think, as we’re here on the planet. Retail has a function. Fundamentally, the way I’ve always thought about it and, look, when I got into this 20 years ago, I didn’t know a thing about retail or ecommerce or anything more than anyone else, but fundamentally, if you are a manufacturer, you’re good at making things. Like making a great product with certain features and functions that solves a problem in the world. Fundamentally, if you’re a retailer, you’re really good at marketing at the end of the day and you’re really good at helping people make decisions about the types of things you want. So just because you can make a product doesn’t mean you know how to talk to a customer or describe that product to the customer well. You could be a great engineer, you could be a great designer. But that’s different from being a great salesperson or a great merchant.

Rick Watson:

So I think as long as that is true, there will be both types of organizations forever. But the fact that it is direct to consumer… The barrier to entry to selling to a consumer has just gotten so much lower for the manufacturer side of the equation. There’s you know what? I can hire a few… They have figured out some of the things that the retailer is doing. If I think about this stuff from the beginning, like I could take better photography. I could describe my products a little better. I can figure out how many bullet points Amazon wants. Why can’t I do this all on my own? Particularly with the rise of Amazon.

Rick Watson:

So I think just the barrier to entry has gotten a lot lower where… I mean, I could tell you, even to this day, there are so many manufacturers that once they get a PO for the product, they don’t want to think about it ever again. Like don’t ever send me a return. I’m looking to get the next order and that’s the way I do business.

Travis Mariea:

Right. Well, you think about the poster child B2C like an Allbirds. They’ve figured out really well how to sell direct to consumer. They can do just about anything, if not better than the retailers themselves, right? But there’s still going to be… If there’s a deal to be had, if there’s a partnership to be made in another channel, then it’s going to happen, right? I mean, I’m sure. I don’t know if they’re sold via any retailers today and there’s always that aftermarket stuff, there’s always that liquidation side of things that… It’s interesting because the Allbirds of the world didn’t exist 10, 15 years ago. They are almost all sold through retailers. There’s always been Nike, but at least they weren’t that common. But like you said, the lower barrier to entry has really accelerated that. There is no doubt.

Rick Watson:

Yeah. Yeah, and I think, look, as long as there are places where consumers go that aren’t setting foot in your store or going to your website, brands are going to want to be wherever the consumers are. So it doesn’t mean they want those consumers to stay there forever, but learning about how consumers buy, particularly ones that you haven’t sold to before is always going to be super valuable, whether it’s on a marketplace or in a retailer.

Travis Mariea:

Sure. All right. Now we’ve established that retail is still here. Reselling products is not going anywhere, which is good. It means that we’re going to stay in business. What are we seeing right now? Are we seeing a reverse where Amazon’s going into department stores? Everyone 20 years ago, right? Walmart, everyone, they were pure brick and mortar, department store-focused, whatever. They got an online store. Now, all the digital firsts are going to physical, whether it’s Amazon, Allbirds, people are opening up stores. What are we seeing right now? What’s the play? What’s the major shift in the market?

Rick Watson:

Yeah. I mean, I think even pre-COVID, the big shift if you were a retailer, it’s holding less inventory. Your POs were getting smaller and more frequent. If you were placing these big orders and taking on more of the risk, you were like, “Okay, we’ll take some of the risk, but then the rest of it, that’s created or accelerated through the drop ship world, even from people that weren’t used to drop shipping.” Retailers basically started requiring brands to drop ship, even if they never had that relationship in the last 15 or 20 years just to open an account. Like I’m not going to buy everything from you. What do you think I am, crazy?

Rick Watson:

So this whole idea of a first party drop ship was invented based on that, which is really, to me, more about the retailer screwing over the brand. Hey, we’re going to give you the same service, but we’re going to buy less. I’m like, “Ooh, that sounds like a great deal.” No, it’s really not a great deal for the brand because it’s more complicated for them. So I think that’s one trend.

Rick Watson:

I think with COVID in the last year, the most interesting thing I’ve noticed is that there’s a little bit of backtracking on that because of the supply chain in that retailers were trying to have their cake and eat it too by we want a relationship with the brand, we want to buy less, but now, because orders aren’t coming reliably and on time, they’re ordering more to buffer against supply chain challenges. So if I can’t get regular shipments every month and I know that if I order something today, it may not come four months from now and maybe it’ll come eight months from now or maybe it’ll show up three months from now. I don’t know, so I better have whatever I can order, I better order, which has caused constraints in warehouses now too.

Travis Mariea:

Yeah. No, that’s an interesting point. Yeah, I mean, it’s been a power shift back and forth. It’s supply and demand. Literally supply and demand. So we’ve all been talking about COVID and this shift, and retail is not dead, even past COVID, you can see people are opening up stores or traditional retail. I’m just curious, as someone that leads this space in thought leadership, what are people not talking about? I know this is a curveball. We didn’t send this to you. I don’t know. Hopefully give you a second. But I’m curious what maybe is underrated that is not getting as much publicity that you might see in the traditional retail outlets? What’s under the radar?

Rick Watson:

Yeah. What’s under the radar? I think people are still not, I think, optimizing their supply chains as much as they could be. Everyone still thinks about marketing and ROAS. That’s what you hear a lot of the conversation. But in particular for brands that are… Supply chains, I think, are getting more complicated. So before it used to be you had to ship pallets to your retailers or to shelf stores, whatever it is. If you’re selling to Home Depot or Lowe’s or Walmart, you’re shipping pallets. Then direct to consumer came along and now, I need to learn how to ship eaches. Well, maybe it’s a 3PL, maybe I can do it alongside. Particularly if it’s a small business, I want to do it alongside my existing stock.

Rick Watson:

Then Amazon came along, says, “Well, you can sell here, but you’re really not going to rank anywhere unless you’re FBA. By the way, you can only ship us just a little bit,” right, “at a time, and it better be selling or else we’re going to charge you a lot of money or we’re not going to accept it, one or both.” So now there’s three things the brand needs to learn how to do and then balancing between the two, which things I ship myself versus which things I leave on Amazon, and how to make all that cost-efficient. I still think that most brands are really struggling with that balance, and particularly because Amazon is growing so much. They are still trying to learn that.

Travis Mariea:

By the way, Macy’s or Dick’s Sporting Goods, now they want us to drop ship. So now, figure that out. Right?

Rick Watson:

Right.

Travis Mariea:

So yeah. Actually, that’s a really good point. Very cool. Yeah. I’m glad you’re able to… I knew you’d come through on that. The one that I also just thought of as you were talking earlier about the dot-com bust, and we’re seeing it, everyone in ecommerce is seeing this acceleration of capital into ecommerce, into software, into SaaS. The stock market’s on fire. Valuations are getting crazy. It’s because we decided, okay, ecommerce, online, it’s here, it’s here to stay. It’s the new way we do business for sure. Right? COVID has definitely accelerated that. Any kind of bust? Seeing the dot-com bust where everyone was so sure of the internet at that time and everything they believed in at that time to now, anything on the horizon that you might see as a potential bust or indicators leading towards a bust?

Rick Watson:

Look, I mean, I won’t have any sort of negative predictions about an entire sector or something like that. But you always just go back… To me, it always just goes back to fundamentals. What product are you providing, what value are you adding? This is funny. Being on this channel, a lot of people five years ago wanted to be into drop shipping. Like, “Ooh, I’m going to drop ship and I’m going to make $1 million.” They’re in the business for about six months and then they start to do the calculations. Like, “Hey, I’m not making any money here.” I’m like, “Yeah, because you’re not adding any value either. The product’s not yours, the storage is not yours, the channel isn’t yours. What do you own? Where do you expect to be making any money?”

Rick Watson:

So I think the people that are making money are a little bit more… they’re adding value. They’re more vertically integrated. They have that customer relationship. They can manufacture their own product. They can source and make their own product quickly to respond to trends. So I think that people who are not vertically integrated, I think, are going to continue to get squeezed in this world where it’s easy to do everything. You know what I mean? It’s easy to replicate something. So if you don’t have that expertise yourself, if you’re relying on someone else, then that person’s going to learn your business and eat your lunch.

Rick Watson:

So I think that’s true for some of these Amazon aggregators that are out there. There were like 150 of these… How many of these companies are there now? I think it’s really easy to start and grow an Amazon business. Yeah, it’s great until the next company pops up and takes over your search result and then what happens? Or you run out FBA shelf space, then you’re out of stock. What happens then? So yeah. Those are the things. People that aren’t just getting back to the fundamentals of great products, great marketing, great service, and establishing a long-term relationship with your customers.

Travis Mariea:

Yeah. Certainly. Have the fundamentals. I think it’s different now where these are established businesses with customers. What you’re hinting on is a good business model, right? With a moat to some extent. You’re adding value to your customer. We always talk about drop ship. It is a fulfillment model, not a business model. Right? It is a way to leverage supply-

Rick Watson:

I think that’s a news flash. You should put that in red lights. That’s a news flash to a lot of people.

Travis Mariea:

We’ve been trying to preach that forever because YouTube has skilled the word drop ship.

Rick Watson:

Oh, no.

Travis Mariea:

It really has. It’s quiet. Google-

Rick Watson:

You don’t have a garage back there, do you?

Travis Mariea:

Yeah. Yeah, check out my lambo behind me.

Rick Watson:

Right?

Travis Mariea:

It’s because it’s that get rich quick kind of scheme where that’s the kind of way that it’s been portrayed, but people don’t realize drop ship is the only way that Amazon was able to become so big so quick. Right? They don’t realize that Dick’s Sporting Goods, it’s a major part of their strategy. It is just a fulfillment model and they’ve added value in other parts of the value chain for the customer and built a brand, right? I mean, that’s kind of what you’re touching on, is building a brand your customers love, which is easy to do, right? Build a brand. [crosstalk 00:30:46].

Rick Watson:

Yeah, for sure.

Travis Mariea:

Cool. I mean, a lot of awesome stuff there. I really like a lot of those answers. I mean, it’s super insightful stuff. Austin, is there anything else that we wanted to touch on? Anything that you got from your side?

Austin Rose:

There’s-

Rick Watson:

No.

Travis Mariea:

Rick, go on.

Rick Watson:

I was curious. Yeah, I was curious, for people that come to you, what is the biggest myth or misconception that you’re happy to correct for people who get into drop shipping?

Travis Mariea:

Yeah, so since we’ve made the migration or the transition over the Flxpoint, we deal with a different customer segment, right? So we talk about two different customer segments. I’d say those that are trying to get into drop shipping, they think they can plug it into their existing model and their existing software. It is fundamentally different. You touched on it earlier with B2B where taking orders B2B from a cart like Shopify and you think, “Oh, I’ll just start doing it B2B,” we don’t think about the fact that you don’t want to keep a credit card… or Shopify can’t keep a credit card on file. How do I invoice and keep track of net terms? That same side of things on transferring to B2B, the same thing with drop ship. Right? My idea of PO is sending a large bulk PO to my supplier and getting freight in my warehouse. Well, technically when you send a drop ship order, it’s a PO. It’s a PO, right? It’s just for one.

Rick Watson:

It’s just for one thing. Yeah.

Travis Mariea:

Exactly. So how does that work in my accounting software now? Right? How do I account for that? What happens when I cross dock? Where does all of that go? I send a PO to my drop ship supplier. Then I have a fulfillment request come into my warehouse. It’s not set up for that. So it is fundamentally a very different workflow in their current ecommerce operation. That’s why we’re so bullish on… Those that do drop ship have it as a fulfillment model today that works really well in their industry. Certain industries are better set up for it, like auto and electronics and things like that. If it’s currently a good model for them, we’re bullish on drop ship becoming really more of a first class citizen in software and we’re really the first ones, as we believe, from a order management perspective that has made it to first class citizens. So these other order management systems haven’t really thought about all the needs and integration needs from a drop ship perspective.

Travis Mariea:

So I guess, to answer your question, the two segments are if you’re not drop shipping, but you haven’t established a business, you know ecommerce, it’s not so plug and play. You need to rethink… It’s a different paradigm of how you run your supply chain.

Rick Watson:

No, it makes sense.

Austin Rose:

Yeah. I feel like a lot of the times too is people don’t even understand specific edge cases that come up too. Right? The different nuances of fulfilling certain brands to certain states. It’s fulfilling certain types of items to certain countries. Then the biggest thing that we’re starting to see a lot more now too is just international shipping and how are we doing that with my drop ship fulfillment too. So it’s like every week or every month, there’s a new edge case that someone’s trying to solve from an automation perspective and everybody wants to automate it too. Right? So it’s like how much can we automate versus how much are we just going to manually have to adhere to these edge cases.

Rick Watson:

No, it’s hard, especially if you have a pretty diverse supplier network and your website is like, okay, I ship to Puerto Rico. That’s fine, but does every supplier ship to Puerto Rico? No. Maybe not. Maybe their shipping software can’t support it because they’re using the wrong carrier or something like that. When do you find that out as a retailer?

Travis Mariea:

Yeah. There’s no doubt. It’s a web of decisions, right? I mean, having that workflow engine of understanding that. We always recommend people, going back to your question, right, you should do things manually first, right? Everyone wants to automate and they think you can automate drop shipping, but we recommend doing things manually and then start automating one by one as you hit…

Rick Watson:

Yeah. That’s really good advice.

Austin Rose:

Yeah. So one thing too that I definitely wanted to hit on, because we saw that you, Rick, you went from engineering team lead to product management, running product to ChannelAdvisor, and then I saw a couple CEOs titles at a couple different companies, what was the moment that you’re like, “You know what? I’m going to start my own consulting business”? Like, “I’m going to take off from here.” I’m really curious what that is like, just from starting up that type of business?

Rick Watson:

Yeah. I think entrepreneurship in general, I always looked up to my dad who started his own business pretty early on. So I got to see him. It was a totally different domain, financial services. It was a small business. He ran it for many years, so I just got to see the value of delivering good service, charging something fair, working with the same group of employees that were happy, and you could run a business and customers were happy and employees were happy at the same time. It wasn’t like business was seen as a negative thing, which sometimes gets portrayed where you have to be mean or rude to your employees or not… make someone who likes to come back there. So that was the original of it.

Rick Watson:

I’ve always had a little bit of a dual techy and non-techy background. In college, I was the only engineer on the debate team, which it’s just a little bit of an insight into me because I always enjoyed speaking and writing and interacting with people whereas most… The image of a typical engineer, which I could be sometimes, is just dark. You ever walk in… I’m sure you walk into your software engineers, the lights are off. The windows are blacked out. The only light is their screens and they don’t want anyone to open their door because they get grumpy real fast. So that environment is just totally different.

Rick Watson:

I think the first move, to me, was out of engineering and into the realm where you were talking to customers about what they want. So I found that I could get equally excited from writing code to talking with just a customer about what their problems were, to figuring out why a customer wants what they want. That became a really interesting question for me. I think pulling that forward in my career, for me, consulting was an easy way for me to scratch an entrepreneurial itch and do things on my own terms and really contribute back some of my knowledge and expertise in a way that is a little bit more broad scale. So I don’t have to work for just one company and be a part of that one company, I could work for… I can share that and work with lots of different companies that need this kind of expertise. That was a lot of fun.

Rick Watson:

I saw that ecommerce isn’t going anywhere. So even while I was thinking about the company, I started out interviewing again. I talked to a number of folks that were doing consulting and it became a more real idea for me. So that’s really where it came into a couple years ago. Really, the simple idea was that ecommerce continues to grow, talent continues to get more scarce. So one of those things has to give, so I need to be able to… To me, the whole idea was to help a wide array of people. Not necessarily too wide, but to be very strategic about the big types of ecommerce problems I can help people solve.

Austin Rose:

That’s great. Yeah, it seems like you already had that wealth of knowledge and network and then you just were able to put it into practice. We’re starting to hear that more too, is finding talent is just harder and harder every single day. It’s always nice to bring in just people that still have the talent and the expertise and you don’t technically have to employ them, right? With the company. You can just pretty much get what you want solved.

Rick Watson:

Yeah, I mean, it’s really easy for them because it’s hard to find a full-time employee, particularly in certain things. All the developer talent has moved to agencies for instance, if you’re customizing an ecommerce platform. Good luck finding an independent freelance Magento developer. They don’t exist. They’re like unicorns. They’re all in agencies. So finding independent people that are hard, that want to join a company, particularly for a retailer or a brand, you’re not a technology company. Your job is to create products. So tech and ecommerce, it’s not really in your DNA a lot of times. So it’s easy to say, “Let me go to someone that can help me get this set up and then they can teach me how to run it, and then maybe I don’t need them anymore.” To me, that’s totally fine, which is teaching people to fish a little bit once they get the business going.

Austin Rose:

That’s awesome. Yeah, we’re actually wrapping up here on time. Rick, appreciate you having me here. This has been a great conversation. Travis, do you have any final thoughts?

Travis Mariea:

No, I was just curious, Rick, anything else on your mind? Anything that we might not have touched on? [crosstalk 00:40:24]-

Rick Watson:

The last to recall?

Travis Mariea:

I’ll give you the last word if there’s anything you wanted to chat on or any questions for us or things that you wanted to talk about in general?

Rick Watson:

No, I think it’s great. One of the questions you had is do you ever get tired of listening to earnings calls. I’m like, I don’t even know when that started. Part of the things, I write about things that I think people are interested in. So the reason I write about Shopify and Amazon and FedEx and UPS is because it affects every brand, merchant, software developer, consultant, agency is affected by things that these companies do. The easiest way for me to add value is to try to figure out, what are these companies trying to do so that if you’re in the ecommerce world anywhere, how to figure out what it means.

Rick Watson:

Earnings calls, I mean, I’ll be honest, it’s a lot of investor BS. I don’t care about most of it. I miss earnings by this point or… It doesn’t matter to me at all. I care about why they’re doing what they’re doing. That’s what I care about. Usually you don’t get any of that information until investors start asking questions and the CEO answers. That’s the stuff that I’m listening for. Like if you’re on the Shopify earnings call and then you hear Harley answering, nothing against Harley, 10 questions from investors and then an investor asks a question, Harley is quiet and Tobi answers. That’s the question that’s the most interesting because you know nobody else wants to take the question. They all punted it to him and then… So to me, that’s the funnest part of it.

Austin Rose:

No, that’s great. I’ll tell you what, you’re one of the first people I’m just… I’m on LinkedIn, I’m scrolling, I see you post something. I’m like, “I got to read this.” It’s great because it’s like you’re taking the earnings call that nobody would just… could fall asleep to, listening and-

Rick Watson:

Nobody would listen to it.

Austin Rose:

But you pick out a lot of the sections that stand out and it’s just so insightful to be honest. It’s kind of like you have this talent of just being able to pick up off of these calls. So again, that’s great and I love all the posts that you’re doing. Obviously anybody that’s listening, I’m assuming a lot of people probably follow you that’s listening right now and on this podcast, but if you haven’t, definitely go check out Rick on LinkedIn. What are some other plugs you can throw in here for everybody else? You’ve got the podcast coming. That’s right. You just started a podcast.

Rick Watson:

Yeah, a new podcast. So just search on Apple or Stitcher or wherever you are, just search for The Watson Weekly. It’s really just a digest every week of ecommerce news. I also include things like investments, so like when people get VC rounds or whatever, they get acquired, I talk about that a little bit. Find me on LinkedIn, just look for Rick Watson, or my website, rmwcommerce.com.

Austin Rose:

Perfect. Well, thanks for that, Rick. Again, thanks for jumping on. Everybody that’s listening, give us a check and make sure to subscribe and like all of our episodes. Obviously we’re on Spotify, Stitcher, iTunes, or Apple Podcast, wherever that is, and YouTube as well. Rick, thanks for jumping on. Everybody, go check out his website and the podcast. Thank you for the time today. Thanks, guys.

Travis Mariea:

Thanks, Rick.

Rick Watson:

All right. Thanks a lot.