[EP 5] Modern Merchant Podcast: What is a Modern Merchant?

Below, you will find a transcript of the episode.

Austin Rose:

All right, guys. Let’s go ahead and get started. Episode five. My name is Austin, by the way, if you guys don’t know who I am. I’m on the Flxpoint team here. I want to welcome you to The Modern Merchant Podcast. The Modern Merchant is a place for online sellers to gain valuable insight into the modern world of multi-source and multi-channel commerce. And so, today, we came out with some great content. What we want to talk about is, what is a modern merchant? Today I’ve got Travis, CEO of Flxpoint added to the podcast. Then I also have Matt, who is our CTO as well. Travis, Matt, welcome.

Travis Mariea:

Hey.

Matt Myers:

Hey. Good to be here.

Austin Rose:

All right. We can hear you. We can see you. Next time we’ll have drinks. I guess we’re not going to have it today, but we’ll be sticking with this five o’clock podcast. Super excited about this. This is going to be a great start to identifying what it really means to be a modern merchant. Obviously, that’s our title of our YouTube and our brand. Let’s go ahead and get jumped in.

Austin Rose:

I’m going to go ahead and read off a definition of what a modern merchant is. I think this is great and we can break this down into a couple different sections. A modern merchant is a retailer, distributor, or brand that believes in a flexible and agile supply chain, paired with a diversified multi-channel sales strategy. Let’s start simple. Let’s start at the beginning, and we’re going to talk about who is a modern merchant.

Austin Rose:

We already talked about the three there, and Travis, I’m going to send this over to you for the first one, because we see this all the time. We get people mixed up all the time, am I a retailer? Am I a brand? Am I a supplier? It’s like all these words are just loosely defined. In your words, give us a breakdown of those two personas, retailers and brands, because, again, I think they get mixed up a lot.

Travis Mariea:

Yeah. That’s really where we started using this term modern merchant, because whether you’re a retailer or a brand, it’s really about just having a more really diversified sourcing and supply chain, as well as sales and distribution strategy. And so, if you’re a brand, traditionally, you’re going to see that you own the product and that you’re reselling it to a retailer. You go through that standard traditional, whether it’s direct to consumer or through that standard traditional distributor or to a retailer, typically buying the brand and then reselling it to the consumer.

Travis Mariea:

The whole modern merchant side of things is you can be a brand, you could be a retailer. You could be a distributor. You could be any one of those within that traditional supply chain, but it’s really about breaking outside of that very linear supply chain. A great example as a brand that’s a more modern merchant is a brand that does go direct to consumer, also sells through the traditional supply chain. Might supplement and augment their catalog with some drop shipping additional merchandise and then almost retail that additional assortment that’s outside of their brand.

Travis Mariea:

That’s a modern merchant that blurs those lines between brand and retailer. Same thing with a retailer. They might act as a retailer, which we traditionally call someone that is reselling a brand’s products directly to consumers. But they might also have a B2B side of their business where they are selling at a wholesale price to other businesses. Maybe it’s just a certain segment of their own brand. You’ve seen like you go to a grocery store and you… Costco’s got that Kirkland brand.

Travis Mariea:

They sell those direct to consumer, but you could sell those directly to businesses too. So it’s a blurry line there between what is truly a brand distributor retailer. A lot of these modern merchants are all three.

Austin Rose:

Yeah. That’s a good point. To piggyback off of that, a distributor sometimes we call it a supplier or sometimes we or other people or retailers call them a vendor, is someone that does buy in bulk, whether that’s all of their different brands, let’s say, unify and on a screen, buying in all of these eco-friendly brands that they work with and have relationships with.

Austin Rose:

And then, what they do is they bring that in bulk, and they’re the logistical fulfillment experts. They bring it all in bulk and then they sell or resell to other businesses. It’s the main distributor, fulfillment and supply chain. Then at the same time, like you said, a modern merchant that is a brand could say that they are a distributor because they do sell in bulk to other businesses as well. So it definitely is loosely defined, but being a modern merchant, we’re going to talk more about that here in a second. It’s always good to find that there’s three different personas.

Travis Mariea:

Yeah. Real quick on that. It’s funny because it’s all… We hear about terminology a lot. It’s all related, really. Someone is a supplier to you. You can supply things. I mean, really, it’s like when we talk about suppliers a lot, you’ll see it in different content and e-commerce. It’s really about someone that is providing goods in any form. But you’re right. A brand, typically, a distributor, a wholesaler, all under the supplier umbrella because there’s typically supplying.

Travis Mariea:

Then we segment between supplier and then retailer, which is pretty clearly defined as someone typically reselling products direct to the consumer. But depending on who you talk to, that terminology can differ.

Austin Rose:

Yeah. Yeah. We hear that a bunch. Let’s go ahead and dive into that first part of that definition besides who they are. The first thing that stands out to me, and this is really important, is what is a flexible and agile supply chain and why is it important? We’re going to break this down into what a modern merchant feels that something is flexible and agile, and, Travis, let’s start it with you. What would you say, in your own words, is a flexible and agile supply chain?

Travis Mariea:

Yeah. I mean, it’s what it basically sounds like. I mean, when we talk about modern merchants, it is breaking outside of that barrier of that traditional supply chain. I guess it’s probably worth talking about what that is. The traditional supply chain is a retailer buying from a distributor who has bought from a brand, and going through that traditional supply chain. And then bring it all in-house and store it in… Typically, one warehouse is all they have the capacity to manage. We’re not talking about the top 1% of the Walmarts and Targets and those of the world.

Travis Mariea:

And Amazons, obviously, who have done a lot of this already and have been doing it for years. But the mid market retailer would buy in bulk, store in one warehouse, maybe in a brick and mortar as well, and then ship it out on their online store, commerce orders until they’re out of it and reorder, ideally a little bit prior to that so they don’t have any stock-outs.

Travis Mariea:

The more flexible, agile, is what we refer to a lot of times as distributed fulfillment, where you have your own warehouse, where you have inventory there. You’ve got your brick and mortar that you have obviously inventoried in your inventory system that you know you have different quantities in a different location there. You also might maybe drop shipping the same products and having that same product in that location.

Travis Mariea:

Lastly, you might have a third-party fulfillment service that you work with, like a ShipHero or 3PL Central, or one of those guys that’s strategically on another side of the country or international or whatever. I guess, to sum it up, having that same product available in multiple different locations that can be sourced at any given time, depending on where that order’s coming from or any kind of business logic that you have in place, that’s what we think about as a flexible and agile supply chain.

Austin Rose:

Yeah. I think the term agile stands out to me the most because in, again, the traditional supply chain on buying in bulk, all of these eco-friendly goods, because I have this eco-friendly brick and mortar store. At the end of the day, someone really wants Tom’s soap and it’s like, “Well, I’m out of stock. Sorry, can’t be my customer.” Instead, modern merchants are more agile in the sense of, “Oh, we might be out of stock here in the brick and mortar store, but we have it available online.”

Austin Rose:

And then people can go online and either purchase it there, or they’re just always in stock on their website. Then what you’re able to do is use some type of system and different logic, obviously, Flxpoint helps out, where you can source that product from all these different locations that you were mentioning. So it is being agile and not having out of stock products and making that as best as possible.

Austin Rose:

One thing that I want to hit on too, there’s a quote from the blog that we wrote. I really liked this, and I think this is a nice little segue over to Matt. It says, “This integrated and agile supply chain strategy allows them to offer a more extensive product assortment and more reliable inventory availability than their competitors.” So, again, hitting on what I was talking about. Matt, I’m going to swing this over to you. What would you say is the most common way people can integrate their supply chain?

Matt Myers:

Yeah. Just briefly, to touch on the flexible and agile stuff, flexible, to expand it from a tech side, is every supplier out there, every brand, whatever terminology you’re integrating with, they have some sort of different format of data too. And so, another big piece to the flexibility is being able to actually integrate with them without having to reinvent the wheel every single time. I know that that’s one of the main value props that we try to provide.

Matt Myers:

And then agile, also, obviously being agile and being able to provide them a product and being able to fulfill the order that they submit to you. But also in the sense that as you grow in scale, you want to be agile to add new suppliers, add new distributors to your wheelhouse and have that form into a cohesive fulfillment solution, and just be able to be now at a new location availability. And so, we see that a lot.

Matt Myers:

It’s funny, when I thought of this, it’s really the same thing as tech. It’s just in a different concept where a good example from a technology perspective is if you want to build a system, you add new servers as your need capacity. You could think of those servers as being suppliers in this case. If one of them fails over, you’ve got to backup fail-over to go to, to fulfill on that item or whatever it may be. So that type of solution definitely comes into play. If you don’t mind just maybe repeating that question, I’ll dive into that second part.

Austin Rose:

Well, you hit on it. I mean, it’s talking about the different ways people integrate to suppliers, or really the most common way. It segues into that. Obviously, Flxpoint, we try to be agile and flexible from an integration perspective. But how do most people commonly integrate, what do you see as the most common ways?

Matt Myers:

Sure. Yeah. This is obviously a question that we ask ourselves a lot because we are trying to do our best to build solutions that will meet a lot of these needs. And so, one of the most common ones is just pure files. People transmit files in this industry. A large portion of suppliers and vendors use files. Sometimes that’s in a very specific EDI format, which some of the bigger names are probably familiar with. Sometimes it’s just standard CSV, TSV files that people are transmitting. You’re usually over FTP or email or some other direct download.

Matt Myers:

So just being able to take a file, parse through it, make sense of it, import that data and map it in, maybe even build rules on that, that’s a common use case these days. The other common one is people are on systems out there. Not everybody, maybe smaller brands aren’t. But even smaller brands generally gravitate towards a system. Maybe that’s a POS system. Maybe that’s a system like Shopify or BigCommerce that they’re leveraging to give access to their distributors.

Matt Myers:

And so, a lot of times, just having interconnected systems like that, when you meet a brand and they say, “Well, we’re on Shopify,” you can leverage a pre-existing integration. So I would say most of it is a file-based connection. Second most is probably being on a different system or platform that can be integrated to. You do have the occasional proprietary, custom homegrown solutions that people integrate to. But those are usually few and far between. So just having at least a file structure or an existing platform that we can integrate to usually handles most of that.

Travis Mariea:

We’re seeing more of that, where in the past, it was always proprietary systems and everyone was siloed and it was tough to integrate together. Because more and more people are moving to a platform that has an open API, having an API is the standard nowadays, to be able to connect to other systems. That’s leading to this concept of a modern merchant, which I love that Matt brought up the idea of the modern merchant and being more agile and flexible in their business operations is very similar to just running a tech company like we do.

Travis Mariea:

I’ve always drawn the conclusion that it’s very similar, like the move to drop shipping and distributed order management, distributed fulfillment is very similar to the on-premise move to the cloud. There’s all the same barriers, all the same issues, all the same real trust issues and doing it that prevents people, almost scoff at it, drop shipping. “I don’t drop ship. That’s crazy.” There’s some business problems that prevent people from doing it, which all makes sense. But those that are able to leverage it and take the jump can see the advantages in it.

Travis Mariea:

I mean, the trust issue thing is the greatest example. I mean, you’re relying a lot more on your network now and other people, that if you don’t have the right network, the same… If you’re relying on AWS, it goes down right in the cloud infrastructure. But the advantage of outsourcing and having more of a network fulfillment model versus your server in-house, which is equivalent to your one single warehouse, and having to maintain that and all the costs and being an expert in that, I’ve always thought that we’re riding this wave of drop ship that is very early in people accepting it.

Travis Mariea:

Even though people have been doing it for years, it’s tough to implement in that it’s very similar to the adoption of cloud. The last piece of that is exactly what Matt’s saying. More platforms, more open APIs out there that technology is enabling us to get there and get past these rigid integration systems that hopefully will allow for easier integration and more trust between the partners.

Austin Rose:

Yeah. I think one thing too, for being a modern merchant, going back to just identifying your supply chain, I think most people that we’d say are a modern merchant understand all the different ways you can connect. How many people do we talk to say, “I want to connect to a CSV file,” and it’s like, “Come on.” It’s like not knowing different file formats, not knowing what an API is. Back in the day, everybody just loosely exchanged EDI, but it could be file based. And then they’re just saying EDI all the time, is more of a holistic electronic data interchange.

Austin Rose:

I just feel like understanding all the different ways people could connect is a step in the right direction for people to get to the point of being a modern merchant, just so we all know all these different ways we could connect. Because all of these suppliers that you might work with or vendors that you might work with that you source products from, there could be a bunch of different ways that they can allow you to connect to them as well. So just wrapping a bow on that.

Travis Mariea:

Yeah. More digital focus, digital first tech savvy, for sure. I mean, even the largest traditional retailers, brick and mortar, COVID hit them pretty bad. But for years they didn’t make a priority, but they were hiring and saying, “We need to get better about online.” But it’s more than that. It’s becoming a tech company. People talk about how modern companies in general have become like a media company with all the content you’re producing, like we’re doing now and become experts in media production in distributing your content.

Travis Mariea:

Same thing with modern retailers and brands. You have to become somewhat of a tech company or at least leverage the right tech partners. So there’s no doubt, it’s more than just hiring the guy to run your social media and run your website. It’s having a more tech, digital focused culture within the retailer or brand.

Austin Rose:

Yeah. All right. Excellent. Let’s go ahead and dive into the second part of what a modern merchant is. Obviously, we talked about the supply chain, flexible and agile, everything that’s about that. Now the next thing is a diversified multi-channel sales strategy, and obviously talking about why that’s important. Travis, we’ll start this out with you. I mean, this, it’s funny because having multi-channels, selling different places, not just selling on your website, but all these different other areas, it just depends on who the business is, where they see sales coming from.

Austin Rose:

This is more, I would say, talking about the guys that are really moving volume and are of that high volume sellers. What to you is a good example of people selling in all these different sales channels? What’s a good strategy that we see a lot?

Travis Mariea:

Yeah. I want to talk specifically, because I know there’s been a lot of talk already, and for years, talking about, “I sell on my website, and I sell on Amazon, and I sell at Walmart.” We’re not talking about that. Really what we’re talking about in the theme of a modern merchant is, we talked about the blurry line between retailer, brand, distributor. It’s more, to me, the B2B versus B2C, which early in my career in e-commerce and just retail in general, I used to walk the trade shows all the time and there’d be these brands that would sell direct.

Travis Mariea:

They would resell their products to retailers and they’d have a secret retail brand as well. It was this thing, like, “Yeah, we also resell,” and it’s like the no-no. There’s other wholesalers out there that they would use as their advantage to say, “We only sell to retailers. We don’t sell direct to consumer.” We’ve seen this whole direct consumer movement start. It is a true blurry line.

Travis Mariea:

So when we talk about multi-channel strategy, it’s about multi-channel B2B, B2C, to me, at least in this context of this discussion, where you know how to appease your resellers or in some industries, they call them their dealers. I saw a kayak company who had blown up and I consulted with them a little bit years ago. They do this really well. They went direct to consumer like a lot of brands do. But they also really promoted their dealers and they managed their dealers in a way that they were able to manage their pricing differently, obviously, the wholesale pricing.

Travis Mariea:

But even another level of, “Here’s our wholesale dealers. Here’s only our pure drop-ship dealers. Here’s our dealers that have not hit a certain volume and they get different pricing.” So managing that B2B relationship of everyone reselling your product, as well as appeasing them with the technology. They’re not going to force them to go through a B2B portal or even their website to place every order when they’re placing dozens of drop ship orders with them a day.

Travis Mariea:

So it’s about having a strategy for anyone can connect to their sales channel. That’s easy. That’s fine. But how do you manage your assortment of products that go on your sales channel, A, direct to consumer site, the sales channel, B, your Amazon channel that only has a certain amount of products and fulfillment sources you trust to ship out and Amazon’s strict guidelines. And then, C, your resellers, your B2B relationships, how do you provide their correct pricing, incentives for them to work with you, and just work across all those channels in an intelligent way to make sure you’re not hurting the other one by benefiting one of the others.

Austin Rose:

Yeah. No, that makes sense. I agree with you. We see this a lot where people are selling B2B and B2C, and that is where we see our modern merchants, what we categorize as a modern merchant. But at the same time, the higher volume guys are not just selling on Shopify, but they are doing Walmart and Amazon, maybe multiple Shopify sites, maybe multiple BigCommerce sites, WooCommerce sites, things like that. Maybe even selling through all of these other miscellaneous channels.

Austin Rose:

It’s funny because once people start shifting from one website to two to three, in some marketplaces to B2B, so all of these different realms of getting revenue through the door, it gets really unwieldy on managing it, all those orders from all these different channels and trying to do everything manually. This is what I want to get, Matt, your opinion on it is, how crazy can this be manually? What’s the barriers that people need to start trying to get over to start integrating, start automating, start making their lives a little bit easier from that perspective?

Matt Myers:

Yeah. It’s a very loaded question. There’s obviously a lot of variables in that.

Austin Rose:

A lot.

Matt Myers:

The first one is volume. Anytime somebody says manual process, it’s not inherently bad. The only time a manual process is bad is if it’s impeding you from making progress. I have to have three people dedicated to just processing orders all day, and that’s very tedious and it takes up their time and they’re not able to work on other things, for example. That’s when manual processes become bad. But if you’re doing small volume or something like that, generally speaking, you don’t really have an issue with manual processes.

Matt Myers:

That’s the first part. It doesn’t really become unwieldy at small volumes, in my opinion. The second variable to that would be, what’s the importance of centralizing the data? When you think about, again, small volume, it doesn’t really matter too much. But as the volume increases, you may want to start reporting on profitability. You may want to report on sales, sales reports, and understand your sales volume on certain channels versus other channels. All of these analytics that you gain access to the second you centralize from that data.

Matt Myers:

And so, centralization becomes important when it gets to that, when it gets to, “I need to analyze the data,” or I have so much volume that it’s too tedious for me to do this manually. When that happens, the idea of overcoming hurdles, obviously, there are hurdles initially, like integrate to a system and you have to understand those workflows, leveraging partners like us that have done that due diligence ahead of times, definitely helps out because you don’t have to learn all the intricacies of every channel that you’re working with.

Matt Myers:

But basically, I mean, at the end of the day, it really becomes important when you start hitting a certain scale, when you start needing to really leverage the data to make decisions. Then you want to actually start progressing into that.

Travis Mariea:

I’m curious your thoughts… I was thinking about this earlier, just on the B2B side, because I do want to double down there just because I think it is pretty unique on what we’re seeing there now, and people trying to dive into the B2B when they might have traditionally done direct to consumer or whatever. What, from the technology side, the differences there and the challenges that you’ve seen, because I know we’ve seen a lot of different things [inaudible 00:23:39] implement, specifically for that reseller channel and those kinds of clients.

Matt Myers:

Sure. When it comes to B2B, I mean, you think about B2C, the first step of a B2C interaction is that you’re advertising the prices ahead of time. At the end of the day, you make a sale, that’s the end of it. They put their credit card on file or cash and you make that sale and that’s it. B2B is different. B2B, one of the most obvious difference is you have different pricing. So you need a way to manage pricing from a B2B versus B2C.

Matt Myers:

But the more intricate things are the actual flow of, you could say, payment or invoicing from that B2B. I mean, there’s a ton of challenges, like ;let’s say you want to get really advanced with B2B and you want to create different groups, want to give different pricing tiers to group A versus group B. Maybe I want to give a discount to this group or reduce the shipping cost to that group because they have such high volume that they’re a good, reliable reseller of mine and I’d like to give them an advantage.

Matt Myers:

So you have that problem. How do you separate resellers into groups? How do you adjust their pricing and their shipping costs based on their group that they’re in? That’s a problem that you have to solve depending on the system you’re in, as well as whether an order comes in from that reseller. How do I handle that? Do I have them on some terms, like credit terms? Do I charge him immediately when that order comes in?

Matt Myers:

For example, in Flxpoint, there’s an authorization flow where we don’t actually charge that reseller right away. We actually allow them to authorize the order to transmit down. So if they get a fraud order or something like that, they can interject, or if they want to automatically authorize, up to a certain amount, we allow that too. So really, I mean, when you think about B2B, you have a different entity in the equation now where you’re charging a reseller or you’re giving them a specific pricing. You’re invoicing them and giving them their own B2B transaction, in addition to their consumer transaction that they received.

Matt Myers:

So it just adds another layer and there’s a lot of workflows to consider and potentially customize depending on how involved you want to get. So [inaudible 00:25:48]…

Travis Mariea:

Yeah. There’s a lot of technology out there built to just accept someone checks out your website, pays with a credit card one time, comes back a week later, hopefully. But to send in automated orders every day, without having to manually go tell you what they’re buying, you need to have API, you need to have EDI set up, whatever. Early on, I guess, is a shock at the time, but it makes a lot of sense now and I get it. Most of those are not set up to just have a card on file and just get the transaction.

Travis Mariea:

You don’t keep the card on file with Shopify, even though they’re integrated with Stripe and Stripe protects all that stuff. But just the simple fact of like, ‘Oh, how do I accept a repeat order from a customer?” There’s shockingly a lot of these e-commerce systems that will allow you to just keep a card on file.

Austin Rose:

Yeah.

Matt Myers:

Yeah, for sure.

Austin Rose:

Keeping a card file and automatically charging that card on file. How many people have we talked to where it’s someone’s daily process of just going in copy and pasting credit card information and hitting a button to get that into their bank. It’s pretty crazy, where a system could be doing that for them. I think another thing, at least a good point to note is MAP, minimum advertising price. That’s such a huge thing for people selling to other businesses, is if they are doing a direct consumer and direct to businesses, doing both a B2B and B2C.

Austin Rose:

They want to make sure that their retailers aren’t selling below their own. And usually, a MAP is a great way of leveling the playing field. But then having systems in place to help enforce MAP, because how many times do we hear people getting kicked off, or getting yelled at, or getting in trouble with selling below MAP on Amazon and their website and these different sales channels? So another nuance thing to think of.

Matt Myers:

Yeah. A great point about this, I mean, for years when we would onboard customers, it would be, “I have this Shopify store for my B2C, and I have this other Shopify store for my B2B.” That’s a common… Doesn’t have to be Shopify. Replace it with WooCommerce, BigCommerce, whatever it may be. But that’s a common theme that we’ve seen. And to your point, those other systems aren’t really designed for… They don’t have a MAP field in Shopify, for example, on the outbound.

Matt Myers:

And so, if you’re trying to enforce data, that is a very different flow from a B2B transaction versus B2C, where in B2B, I’m giving you what you can charge for, in your case, what the cost would be for you. But I’m also giving you restrictions of, even though that’s your cost, you can’t go below this amount, this MAP. And in a B2C transaction, you don’t do that. And so, there are a lot of nuances too, not only to the ordering and the invoicing and the payment of all of that, but also to transmitting the data for them to actually be able to sell those items.

Matt Myers:

That’s a challenge on its own, to give them updated, accurate inventory information consistently throughout the day as you get orders, and have them be able to reflect that too. So a ton of challenges when it comes to that realm, especially if you’re someone that’s used to the B2C, trying to get into the B2B for sure.

Travis Mariea:

Yeah. And underserved. We go back to this top 1%, even let’s say the top 10%, they’ve got systems in place, ERPs and things like that. But most of them are archaic, most of all file-based type stuff, or EDI. The modern merchant is a small, agile up and comer. There’s a lot more people able to start a company and get it up to a couple million, 10 million in a year, two, three years, whatever. They’re putting off ERP implementation for as long as possible.

Travis Mariea:

Flexible and agile is not just in the supply chain, but it’s also definitely the technology, not taking a year to implement SAP, or a year plus and drop in six figures on implementation. It’s a little more of a stair-step agile approach.

Matt Myers:

Yeah.

Austin Rose:

Yeah, definitely. Good note to finish that on. This next question that I wanted to hit on is probably pretty loaded as well. We could probably talk about this for a while. We’ll start with you, Travis, but I want both of you all’s opinion on this. There’s a lot of companies out there that integrate, and then I put in quotations, “automates” to pretty much all your big sales channels. So Shopify, Amazon, WooCommerce, Magento, all the marketplaces, all the sales channels. Everybody integrates with everybody.

Austin Rose:

How would you guys say one modern merchant, or someone that wants to be a modern merchant… Let’s talk about that because if you’re a modern merchant, you have a system that integrates all your channels and supply chain and makes things easier and automated. But if someone wants to get to the point of being a modern merchant and implementing something to help integrate and automate, how does one go about evaluating and choosing the right system to integrate and automate? What’s the first step? What’s the questions to ask yourself? Where do you start? Things like that. What do you think Travis? What pops up for you?

Travis Mariea:

Yeah, I think you look at where the biggest opportunity is that you’re missing, and at the same time, where the biggest time suck is that you’re spending a lot of your time on that you probably shouldn’t be. Looking at that, it can differ from each business. It could be manually entering tracking numbers, or manually placing orders, or uploading new products because you have a ton of new products coming in and you have a large catalog of drop ship distributors, whatever it might be. It’s looking at that.

Travis Mariea:

Unfortunately, it’s pretty broken if you ask me right now in the whole process of evaluating new software. We’re part of that problem too. You come and we try to do as much as we possibly can by giving videos up front so you can watch it. We’re a fairly robust system, so we’re not at the whole free trial stage yet. Even if you have a free trial, it’s very tough to really fully understand a piece of software, if it’s going to fit your needs. You typically need to talk with someone.

Travis Mariea:

As far as getting to that next step, it starts with a checklist of what you want. And then it’s really just the process of internet research and getting out there and doing free trials, doing the demos, but keeping track of spreadsheet or whatever of really the needs you’re trying to solve. That’s step one. A lot of times people might not know what they want, so that checklist evolves as you talk to each company. But yeah, that’s typically the start.

Austin Rose:

Matt, what do you think?

Matt Myers:

Yep. I could probably talk about this for an hour. I’ll try to keep it brief. But I think Travis made a good point, like you have to define your requirements on what you actually need to accomplish. That’s obviously a big thing. You have to understand the intricacies of your business. For example, how do you determine where to send an order today? You have a process that you do today, whether it’s manual or instinctual, whatever it is. When I get an order, if I could potentially fulfill this from three different places, I make a decision on where to send that from.

Matt Myers:

And so, understanding all the intricacies, those pieces of what you do today or what you would like to do, for example, is very important in assessing when you’re looking at platforms. Do they check this box? Do they check this box? The first thing I’ll say is it’s obviously daunting picking a platform. There’s so many out there. So many of them do some things very similar, but completely don’t do other problems and things like that. It’s very difficult to assess.

Matt Myers:

But what I would generally do and recommend to somebody in this position is understand your pillars. Where does your inventory live at, is a big question. What is the source of truth for your inventory? If you have a distributor, their CSV file they provide you every hour may be the source of truth for inventory. If you have another system, then that source of truth might be like a Shopify integration or something like that. If you understand where all the pieces of the puzzle are, it becomes a lot easier to actually put that puzzle together.

Matt Myers:

So I know my inventory lives there. I know I can get updates at X amount of time. And I know that when I get that, my ultimate goal is to then update my Shopify site, my Magento site, or my Amazon listings, with that new inventory data. And so, understanding those pieces, then you can go into a conversation, check a few boxes to make sure the software is a general fit. Go into these sales calls with your… While you’re consulting these different platforms and basically explaining these pieces, how they need to work and the nuances in between them, where are your orders coming from? Where do they ultimately need to get to? How does that system accept those orders?

Matt Myers:

If you understand those pieces, then you can actually make an educated assessment of, will this platform be able to accommodate those use cases or not? And be able to make an educated decision on what you should go with.

Austin Rose:

Yeah. I would say too, once we start evaluating, number one, exactly what we talked about earlier, what’s the pain point and what do you need to solve that pain point? Let’s start there. And then next is, “Okay, I’m tired of having three people dedicated to manually processing orders when I could be using them for marketing purposes. We need to help automate our ordering process.” That’s the number one thing to go for.

Austin Rose:

Then from there, it’s evaluating, okay, what softwares are out there? I mean, we’ve talked about this, the likes of a G2, a Capterra, a lot of these different companies out there that talk about some of the best softwares out there. And then going from there, I think the big thing to do is if the company is not able to tailor a demo, like they can go into the use cases, give you a full-blown share screen and give you a demo and show you how all of these different operations can help solve these pain points, I think you’re probably not talking to the right person.

Austin Rose:

At the same time, I would say, to help with that evaluation process of making sure that it is solving it is, do you need someone like a company to a third-party integrator, to help just connect systems together? Or do you need pure, true automation? Do you need to solve every use case of orders coming in from all these different sales channels on outlets to be fully and completely automated and not hands-on, a group of people to…

Austin Rose:

Like that’s my everyday thing, I’m catching orders from here and there and I’m making sure I’m processing that to the right suppliers and vendors and warehouses and things like that. I think that’s what I see is the evolution of evaluating third-party integrators.

Matt Myers:

Yeah. The one piece I’ll add is, generally, the most successful customers that I’ve seen at least are ones that come in not attempting to automate everything day one. You can overlook a lot of things trying to automate initially. My recommendation generally is try to do what you’re doing today. Today, if you have manual processes or whatever it is, try to at least replicate that in whatever system you choose to go with and then find the wins.

Matt Myers:

Find the automation wins of, “Oh, I don’t actually have to upload a file. You can pull that for me. Great. I don’t have to check to see if it’s from Hawaii to flag that order as a different type of shipment or something like that. Great.” Find the quick wins after that. But try to replicate what you do in the system, even if it’s just in theory while you’re evaluating. You don’t have to actually do that.

Matt Myers:

But try to replicate it in your mind and understand where the potential gains are of automation. Then you can see, is this a good fit or not. Maybe they don’t have any automation where you need it or something like that.

Travis Mariea:

Yeah. Migration is hard enough. Do a one-to-one first, and we always do have phase two, phase two automate.

Austin Rose:

Yeah. I always get phase two. Break it out in phases, and once it’s… Everybody’s like, “Yeah, that sounds great.” Phase one, phase two, phase three, it’s a perfect way of migrating any system or getting up on any brand new system, to make sure systems work.

Travis Mariea:

I always come to back to, like, with great power comes great responsibility. Automation, it applies there. We automate a lot of stuff with our marketing automation software, HubSpot. The more you automate, the more you have to track and understand, where is that? If I press this button, what pops up over here? If I turn this knob, what flips over here? Trying to do that all at once. It’s funny because everyone does want to do it all at once. But the more savvy customers for sure understand that, let’s get over, let’s get migrated to any new system that empowers them to be more of a modern merchant, more agile, more flexible, and then starts knocking out the quick wins like Matt said.

Austin Rose:

Yeah. You went pure Uncle Ben, Spiderman quote there.

Travis Mariea:

Love that. Love that.

Austin Rose:

Yeah, man. Love Uncle Ben. Another thing, to wrap up-

Travis Mariea:

Was it like it was some philosopher? That’s-

Austin Rose:

It was, but we’re sticking to Uncle Ben in Spider-Man because that’s childhood.

Travis Mariea:

Not the guy in the rice. I was like, “There’s no way the rice guy…

Austin Rose:

I can’t remember what it was. That was a good one. But one thing to note as well is I would say that whenever you’re going in and you are evaluating a third party too, and it takes me back to what you said, Matt, earlier is one who’s got the analytics, because at the end of the day, you’re going to need analytics to make business decisions if you really want to grow your business or scale it, or really have any feet, any goal that you want to accomplish.

Austin Rose:

So the analytical side is a really big, important thing that I don’t think a lot of people talk about. But the thing is, with analytics comes great responsibility, and it’s the responsibility of owning the data. So who can actually house and own all of that data? Because you can’t just say, “Oh, we’ve got all this great order analytics side of things,” or whatever, but you don’t house data of integrating to your vendors and your suppliers.

Austin Rose:

So how do you know these are your best suppliers? How do you know these are your best sources? How do you know you can rely on this person more than this other company? So I think that’s the underlining thing that maybe we should have a whole other podcast for, is the analytical side of things and the data management too. So I think that’s a huge thing to wrap up on. Let’s go ahead and jump into this last quote. I really like this one because this could go in a bunch of different directions.

Austin Rose:

This was on our blog and I thought this was great. I’m going to read this off for you guys. “Modern merchants are less reactive and more proactive about investing in solutions that will increase their agility and capacity to meet their obligations to their customers.” Travis, out of that quote, what stands out to you? What’s a last thought that we can wrap this up with?

Travis Mariea:

Yeah. I mean, there’s been a lot of talk in this post COVID and just this retail apocalypse last five years really of talking about how retail has been sitting back and just happy and okay with how things are going from a brick and mortar perspective and has not really gotten serious about digital. Like I said, I think every big retailer that has gone out of business had a e-commerce department. But we’ve seen a lot go out. That’s not getting serious about it. So I don’t want to harp on that because it happens to the best of businesses.

Travis Mariea:

But, one, it’s being more proactive about making technology a priority, and making it really a new strategy that you have to embrace fully. It’s not just adding the same exact assortment you have in your store, online. It’s about implementing new systems and rethinking what you’re doing completely, from just the traditional supply chain to this more flexible agile supply chain we talked about. So getting in front of it like that.

Travis Mariea:

But then, also, the other piece of that is being more proactive in making sure that you have the partnerships in place, that you have the supply chain that can fulfill on certain runs when you have this huge run on a certain item. A lot of traditional supply or retailers, they’ve had these reordering rules where if it goes out to a certain stock, they issue a PO and they get the PO into their warehouse. That’s great. But if it’s a run and everyone’s doing that and you can’t get the PO out quick enough and get it into your own warehouse, whatever it might be, you want to be the one that’s already set up to drop ship and can take that order right then and there.

Travis Mariea:

I mean, that’s being proactive in setting up these relationships, setting up these integrations to be the one merchant that does have stock and doesn’t have to overcommit. So it’s taking that mentality. In the same vein, the same theme of the modern merchant being a blurry line between retailer, brand, distributor, all that, it’s if for whatever reason, consumers spending drops, but you’ve opened up an arm of the B2B side of things that for whatever reason the economy is flourishing.

Travis Mariea:

It’s being proactive and opening up those channels and thinking about not just sitting back and resting on your laurels because you’re in the mall and people are coming to the mall and you’re making a ton of money. It’s being proactive and being prepared to be agile. Let’s put it that way. That’s the way that I think about reactive versus proactive and how it relates to the more modern merchant.

Austin Rose:

Yeah. I like that. Matt, what about you?

Matt Myers:

Yeah, an interesting take on this. It’s like a survivor bias. The modern merchants that are proactive are still around to some extent. And the ones that haven’t been have unfortunately faced slow times and whatnot. But yeah. I mean, it’s just a competitive environment. You’re on the internet. You’re in an online ecosystem. Anybody can get up and running within a few days. But they can’t build infrastructure in a few days. They can’t build relationships with these various brands and suppliers.

Matt Myers:

They can’t integrate all of that into a system that allows you to quickly switch fulfillment sources when one goes out of stock or when one all of a sudden raises their prices. You can’t build that overnight. And so, it’s like somebody recognizing that this is a competitive ecosystem and I have to be able to adapt and be able to offer things, whether that’s stock, whether that’s the best price at the best time, whether that’s extremely reliable inventory updates so I don’t get a ton of oversells that I have to cancel or discredit my reputation because I didn’t have those items in stock at the time.

Matt Myers:

These modern merchants are cognizant of the fact that this is a competitive ecosystem. In order to compete and to build my brand and to build a successful fulfillment logistical network for selling products, I need to be proactive and I need to integrate these things, and I need to be able to make decisions on them. For example, if I do have a run-on sale, I need to be able to react to that and determine, did that happen at a certain time for a certain reason? Is there any way I can increase my margins on that? Is there any way I can order some of those in-house and have some of those ready to go in case this happens again?

Matt Myers:

All of that involves analytics. It involves integration. It involves automation, getting that information updated quickly. You’re just going to naturally be in a more secure and competitive situation if you do those things. A lot of the people that we see thriving in these times are taking those principles on. They’re adapting to that. That was my take on it.

Austin Rose:

Yeah. No, I agree. I think for me personally, I think it’s the cost saving side, being proactive on saving costs, whether it’s tech, or labor cost or, I mean, anything. We see people that build their own proprietary system that they’ve been running for 10 years. And they’re like, “I put millions of dollars into this, where I could have been using a third party to pay a sixteenth of the cost.” Things like that.

Austin Rose:

So for me, I think a modern merchant is proactive in saving time, saving costs based off of all of their different supply chain in their sales channels and offloading that time and cost into more important things, which is, in my opinion, getting customers, getting sales. I mean, you’re selling online to make sales, drive revenue, and have a brand.

Matt Myers:

Yeah. If I can add one more piece to that. It goes back to the cloud analogy of historically there weren’t the AWS’s of the world. So the people that built the competitive advantage were those that had a really good site load time and infrastructure. Like Amazon had a big spiel about if the site loads in less than a second, we increase our sales by X amount. There was a big article on how they use that to their advantage. One of their biggest competitive advantages at the time was a very fast performing site that has access to thousands and hundreds of thousands of products.

Matt Myers:

In today’s world, it’s not really about that homegrown solution. There are now Flxpoints out there. There’s NetSuites and things like that. There are systems that you can use that will give you basically everything you need, from a technological advantage, to compete with these larger retailers. At this point, it’s really about, to your point, picking really curated suppliers and distributors that you work with, having very fast fulfillment times, reliable fulfillment times, and curating your product catalog to be excellent products at good prices, with decent availability.

Matt Myers:

And so, it’s starting to get more into that realm and we’re in this era now where people can put more focus into that rather than the tech behind the scenes, because of platforms like ours that are up and coming.

Travis Mariea:

Yeah. We touched on it a little bit. There’s a book. It’s a really old book. I’m blanking on the name, on the title. But it’s about like most of all IT and technology becoming commodities. It’s no longer a competitive advantage. But I like your take on that, Matt, where it’s like it was and it can be, for a certain period of time, until it’s no longer. In the book, it basically talks about… I would love, at some point on YouTube, someone to comment on the book title. It’s like I’m [inaudible 00:48:59].

Travis Mariea:

Basically the thought is that, if that’s the case and all it goes down to right now, we touched on the analytics side and data being that competitive advantage that you can use. And then building technology to better crunch that data, the big data systems out there, are competitive until they no longer are, which eventually will become commoditized. It’s funny just seeing that we’re in that point now where those proprietary systems of loading a website really fast was an advantage, but no longer is. Every little piece of technology will keep on going down that path.

Austin Rose:

Yeah. That makes sense. A lot of good insights from you guys. We are about to get rocked by a massive storm right now. It’s a light show out the window over here on the other side of the office. So let’s go ahead and finish off here. You guys have any closing thoughts?

Travis Mariea:

I mean, not really. I think just in general, we’ve talked about it, but the modern merchant to us is really one that just is not really held down to the bounds of traditional retail supply chain. I’m really excited to see, in my career in the cloud, I worked in the cloud, that wave, I see that similar thing happening here where things are shifting, that technology, and just the appetite within the industry is converging. So I think we’re going to see some really cool stuff.

Travis Mariea:

This new merchant that we’re talking about will be past the D2C run and all that stuff. It’ll be more about this connected network of merchants and the retailer and the brand and the supplier, all that is going to merge. So it’ll be really cool to see how that plays out. Yeah.

Matt Myers:

Yep. Agreed. Nothing really more to add on my side. But-

Austin Rose:

Nothing more to add besides let’s get some more Uncle Ben quotes going in here. Just keep sprinkling those in. All right. Well, appreciate you guys jumping on today on the podcast, talking about what is modern merchant. So if you guys like the podcast, go ahead and check us out while on Spotify, Stitcher, here on YouTube live streaming. Make sure to subscribe to those.

Austin Rose:

If you guys have any more questions, head to flxpoint.com. Go ahead and drop us a note, as well as go check out our Modern Merchant blog as well to subscribe. Having said that, thanks, guys, for jumping on and we’ll see you on the next one.

Travis Mariea:

Well, appreciate it.

Austin Rose:

All right. See you, everybody.

Matt Myers:

Yep, appreciate, man.